From February 16, the cryptocurrency derivatives exchange BitMEX will introduce a “rule for trading with protection against input errors.” The platform will limit the opening of positions that differ from the market price by 5% or more.
On 16 February, we’ll introduce a new rule to prevent so-called ‘fat finger’ input errors, which can result in sudden drastic price movements that disadvantage other users. Read more here: https://t.co/z8AJvTuJOY pic.twitter.com/fqe1orpTuT
– BitMEX (@BitMEX) February 2, 2021
Market and limit orders will be capped at the so-called Impact Price:
- Buy orders – by a value 5% higher than the Best Ask or Mark Price, whichever is higher.
- Sell Orders – by a value 5% below the Best Bid or Marking Price (whichever is lower).
If the size of a market order is less than or equal to the accumulated size of orders in the order book (up to the maximum significant price), then the requested order will be fully executed.
If the order size is larger than the accumulated size of available orders, the order will be executed only up to the maximum significant price, and the rest of the order will be canceled.
“While these types of errors are rare, they can cause dramatic price fluctuations,” says the exchange’s blog. “The mechanism protects not only the trader who placed the order from sudden price shocks, but also other users.”
Some Twitter regulars have criticized BitMEX’s decision.
These are BULLSHITS! The fat fingering is part of the game. It happens in all kind of markets. In all exchanges. YOU CAN’T SET A RULE TO STOP IT!!
Do that and you will loose all of your customers including me.
There are people who need to get filled above or below 5% instantly.
— Crypto Realist (@CryptoRealistic) February 2, 2021
According to them, “the fat finger mistake is part of the game,” and eliminating it will lead to the loss of clients.
Fat fingering is part of the fun. You know you’re alive when you just spent 10% of your account on trading fees for 1 trade.
– glimmery (@Glimmerycoin) February 2, 2021
In May 2020, The Bitcoin Manipulation Abatement LLC (BMA) filed a lawsuit against BitMEX on charges of manipulating the cryptocurrency market.
In October, the exchange received a lawsuit from the United States Futures Trading Commission for managing an unregistered trading platform and violating CFTC rules in terms of conducting KYC / AML procedures.
In November, BitMEX was accused of withdrawing more than $ 400 million after receiving information about an ongoing investigation.