Binance Extends Self-Trade Prevention to All Spot and Margin Trading Users

Jimmy Aki
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Binance has introduced the self-trade prevention (STP) functionality for spot and margin users. This will help them minimize unwanted self-executed orders and the associated transaction costs.

Binance Scales Tools to Stop Fees From Accidental Self-Trades

On October 11, Binance disclosed in an official announcement its decision to enforce the self-trade prevention feature as a mandatory requirement for all spot and margin users. This will commence on October 26.

Self-trading occurs when a user or a group of related users via the Application Programming Interface (API) engage in transactions with themselves.

This means that the same participant appears on both sides of the trade, resulting in no actual change in the ownership of the traded asset.

Such self-trading can also disrupt the natural process of price determination and skew the data related to supply and demand. Additionally, it can distort the asset’s price data and erode its credibility.

However, according to Binance, the STP function will empower users to avoid unintentional self-trades and the associated unnecessary trading fees. This is because the feature automatically blocks the execution of orders, which would lead to self-trading scenarios.

Moreover, there are three available STP modes: EXPIRE_TAKER, EXPIRE_MAKER, and EXPIRE_BOTH.

The company noted that, with full integration scheduled for later this month, the “EXPIRE_MAKER” STP mode will become the default setting for all trading pairs and orders on the spot and margin trading platforms.

The STP mode was chosen because it eliminates self-trading by nullifying the remaining unfilled quantity on the affected maker order. This subsequently allows the taker’s order to proceed as usual.

Additionally, the report emphasized that once the STP feature is active, users can track which trades were stopped in their order history by this feature.

Binance Observe for Market Manipulation

Launched in January 2023, Binance’s STP feature was specifically crafted to prevent the execution of orders that might lead to self-trades.

This precautionary measure is vital because self-trades can distort an asset’s price data and undermine its credibility.

In addition, Binance’s terms of use strictly forbid intentional self-trading, and the platform treats any market manipulation with the utmost seriousness.

In a bid to uphold the integrity of its marketplace, the cryptocurrency company disclosed that its Market Surveillance team vigilantly oversees all trading activities. They also actively pursue cases of deliberate self-trading and other market manipulation tactics.

Nevertheless, Binance clarified that not all instances of self-trading are intentional. For instance, prominent and active traders, including liquidity providers, who operate multiple strategies concurrently may inadvertently find themselves with two of their orders matched.

The company also explained that such scenarios can occur when different trading units within the organization utilize the same unique UID.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.