How do Crypto Exchanges hedge exposure for client orders?

Discussion in 'Cryptocurrencies' started by Fain, Jun 16, 2019.

  1. Fain



    How do Crypto exchanges hedge exposure or make markets for their clients? Beyond just the pairing of buy and sell orders. Anyone have any firsthand info?
  2. Giddiyup


    Well one way I know for sure is at least one of them charges insane amounts of fees. 3 percent on in and out trade. 3 percent!
  3. MrMuppet


    Crypto exchanges usually do not make markets for their clients, some do, but they arr the exception.

    Liquidity provision is usually managed by 3rd party trading firms like B2C2 et. al.

    And what do you mean by hedging exposure? Exposure to what?
  4. Fain


    Hi, Thanks for your reply. Was starting a new job at a crypto Exchange launching and wanted some basics as i'm only familiar with equities, options, futures. Luckily they haven't sorted out the liquidity providers yet and that seems up to me to sort out. Spoke to B2C2 the other day. Very professional though not many coin pairs.
  5. They have own bots to do trading for them. Also, if you have millions of dollars or even more than a billion (for the biggest exchanges) traded per day, even charging just 0.1% fee per trade is immensely profitable.

    Do the math. 0.1% of 1 billion is 1million in gross profits per day.
  6. maxinger


    If crypto exchange is not regulated, why must they hedge exposure?

    exchange boss might just simply disappear.
  7. MrMuppet


    ahh..I don't think you know how that works :)