Trading fees, FX market & market health

Three things I’d like to address today. Trading fees on the fx market & it’s relation to market makers, the pair matrix and tick sizes.

The 0.50% (50bp) trading fee applied to FX transactions is a barrier to people actually using the FX market. Because this fee exists, very large FX transactions are incentivized to just buy lightweight items people are selling into the mm (UTS, drones, etc) and ship them out themselves to avoid the fee.

While this action will still have a place in the economy (acting roughly as a currency peg), users of the FX market would be more incentivized to actually use it. Several people on discord said they intentionally just used drones to move money between currencies instead of using the FX market. The 50bp trading fee is barely doing it’s purpose anyway (providing a deflationary force on the economy). It’s removing, what, 2000 currency per day? Meanwhile the drones and UTS are printing a million+ per day.

I recommend just removing this tax entirely in the interest of promoting the health of this market.

Additionally; the implemented FX matrix is both confusing, but also redundant. My real life job is trading real markets, I am intently familiar with currency pairings and I still get confused\backwards because of the duplication of the markets.

NCC\CIS and CIS\NCC are identical markets. Yet we have two separate tickers and two separate orderbooks. If it’s often confusing for me, it’s more often more confusing for more people who aren’t as familiar with markets. “wait, what market am I trading here? is it… wait this is buying, what price should I set”.

I recommend removing all of the duplicate pairs.

ps. while I have my soap box, changing the tick size on the cx markets would vastly improve the health and liquidity of the market. “penny frontrunning” by 0.01 is a huge problem. People get to be “first” in line without actually sacrificing any meaningful value. I suggest changing the tick size to 3 sig-fig’s. Ex:

  • $6.77 ncc
  • $67.70 ncc
  • $677.00 ncc
  • $6770.00 ncc

Every power of 10 the tick size would increase. The structure would look like this:

  • $9.98
  • $9.99
  • $10.00
  • $10.10
  • $10.20
  • etc

We would see far tighter spreads on the cx markets with this change, along with far greater and more healthy liquidity across all of the markets.

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I believe they said the fee is to discourage scripting, not to deflate currency.

I agree with the duplication. It’s confusing, and there aren’t enough players using the market to use it, let alone to use arbitrage.