Wednesday, April 24, 2019

Coinbase Announces New Market Structure, Aiming To Optimize Market Health

The popularly known U.S.-based cryptocurrency exchange, Coinbase announced a new market structure for its professional platform, the Coinbase Pro of recent. In the report published, the company says the new initiative is aimed at optimizing the health of the market in general.

The New Market Structure

The new market structure is aimed at achieving “increased liquidity, enable better price discovery for trades, and also make price movements smoother. This in turn will lead to a more efficient market and increase trading opportunities Coinbase’s customers.”

The new market structure features; new fee structure that is designed to increase liquidity, and updated order maximums designed to help protect customers from large price movements. Also, it includes, new order incremental sizes aimed at improving market structures, turning off stop market orders, and adding market order protection points.

Further, the blog post made it known that Coinbase Pro and Coinbase Prime would cease their support for stop market orders. Also, all stop orders must now be submitted as limit orders and include a limit price. It was also noted that all currently open stop market orders would be canceled on Friday, March 22nd @ 6:00 pm PDT.

Furthermore, Coinbase Pro and Prime will introduce a 10% market protection point for all market orders. This means that market orders that move the price in excess of 10% will stop executing and return a partial fill. As an example, the blog post explained that “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.”

Lastly, it was noted that the changes would take effect as from the 22nd of March and the platform will be offline from 6:00 p.m. to 6:30 p.m. PDT on the same day.

The Crypto Community Reacts

The proposed changes to the market structure have been met with doubt and negative reactions from the crypto community. One of such reactions came from popular Economist and trader, Alex Krüger on Twitter.

Krüger complained about the increased fees for smaller clients by 33% while lowering fees for larger clients, and he stated that in a rational world, most Coinbase users would move to Binance.

Also, Krüger criticized Coinbase’s decision to disable stop market orders. He stated that stop-limit orders sometimes fail to execute because of slippage, and he suggested using far off limits on limit orders as a workaround. However, Krüger admitted that the changes should lead to increased liquidity and trading activities.

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