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it costs them money to exchange, and they add profit on top of this. the "0 fees" are therefore the sum of these masked in an inflated exchange rate
by 867-5309 4y ago
it costs them money to exchange, and they add profit on top of this. the "0 fees" are therefore the sum of these masked in an inflated exchange rate
- lxgr 4y agoThat's not how an exchange works, though. Exchanges provide the infrastructure for trades to happen (i.e. they maintain order books, match market orders against these, ensure that settlement will eventually happen etc.), but do not take on financial positions themselves. The "exchange rate" is only determined by the order book, i.e. ultimately by supply and demand. So if an exchange makes money, it needs to charge at least some of its participants for these services. That can happen through transparent fees, or through less obvious mechanisms (like making retail trades free, and charging an exclusive market maker for the privilege of that exclusivity).
- 867-5309 4y ago>The "exchange rate" is only determined by the order book, i.e. ultimately by supply and demand. if that were true then all exchange rates would be uniform across all providers
- lxgr 4y agoWhat do you mean by "providers"? Different exchanges? Long-standing price differences are usually reflective of market inefficiencies that can't easily be arbitraged away, such as difficulties funding a given exchange account, insufficient volume to make it worth trading there, or many others.