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Friday, June 14, 2024

Coinbase brings in a few changes in the market structure of its trading platform to improve liquidity, increased fees.


Coinbase, the leading United States-based cryptocurrency exchange, announced that it would execute a series of changes in the market structure for its professional trading platform, Coinbase Pro. The proposed changes, which were announced in a blog post by the company, are made with an objective to improve liquidity, enable better price discovery for trading and make the price movements smoother. As per the post, such changes shall lead to a more efficient market and enhance the trading opportunities for all of its customers.

As per the blog post, the list of changes as proposed by the Coinbase exchange includes: “
1. New fee structure that is designed to increase liquidity by reducing the delta between maker and taker fees
2. Updated order maximums designed to help protect customers from large price movements
3. New order increment (“tick”) sizes aimed at improving market structure
4. Turning off stop market orders
5. Adding market order protection points”

The post further explained each change in detail as below:
– Talking on the New Fee Schedule, the firm gave out the update fee table and stated that “The calculation for volume tiers will continue to be based off trailing 30 day volume. You can also see your trailing 30 day volume within Pro.”

– Next, on the Updated order maximums, the company stated that “We periodically review our maximum order size, which is designed to mitigate the impact of large orders on market liquidity. The latest order maximums can be found on our markets summary page.

– On the Updated Tick sizes the post stated “the tick size of a market is the minimum increment between orders. We will be decreasing the tick size on the following 5 books: ETC-USD, ETC-EUR, ETC-GBP, LTC-BTC, ETC-BTC”.

– On the changes with respect to the stop market orders, the post read “Coinbase Pro and Prime will no longer support stop market orders. All stop orders must now be submitted as limit orders and include a limit price. All currently open stop market orders will be canceled on Friday, March 22 @ 6:00 pm PDT.”

– Lastly on the change related to Adding Market Order Protection Points the exchange stated that “Coinbase Pro and Prime will introduce a 10% market protection point for all market orders. Market orders that move the price in excess of 10% will stop executing and return a partial fill. For example: a market buy submitted when the last trade price is $4,000 will only fill at price levels below $4,400. Protection points help prevent large orders from causing more than 10% slippage.”

The firm also warned the exchange’s users on the planned downtime to execute the changes and stated that “Coinbase Pro will be offline Friday, March 22 @ 6:00 pm PDT to 6:30 pm PDT. Please subscribe to the Coinbase Pro Status Page to receive updates on the market closing and re-openings. “

The changes were received with some doubt and negativity from the crypto community who expressed their concerns on social media. Economist and trader Alex Krüger complained on Twitter that “Coinbase Pro raising fees for smaller clients by 33% while lowering fees for larger clients. Reason: “to further optimize the market health of our platform.” Further adding that “Most Coinbase customers fall under the first tier, the one subsidizing larger clients. Now all US exchanges are a rip-off. Compare Coinbase’s fees with Binance’s. In a rational world, most Coinbase clients would now move to @binance. @cz_binance should be celebrating.”

Continuing the thread, he further tweeted that “Coinbase is also “turning off” market stop-market orders. Only stop-limits available. Which is absurd. Stop-limits sometimes fail to execute due to slippage. Simple solution: use far off limits, turning stop-limits in de facto stop-market orders. “

The only positive point which came out from Alex was in relation to the CB changes, on which he tweeted “On the plus side, CB changes should lead to increased liquidity & trading activity. For two reasons: – low volume traders are less price sensitive, so using them to finance lower fees for larger traders should lead to higher volumes. – reducing taker fees is excellent news. “

Glen Nelson

Glenn Nelson has been actively engaged in stocks, digital currencies and global financial markets. He has recently joined EdgeCoinNews team as a writer. He has studied journalism and have five years of experience in writing news stories in different domains such as cryptocurrencies, price analysis, opinion articles etc. In his free time, you can find him exploring tools for financial analysis.

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