Binance will launch a tool to prevent market manipulation

Binance will launch a tool to prevent market manipulation

Author: Robert Strickland

Binance will launch a tool to prevent market manipulation
The new service will make it possible to exclude transactions of a trader with himself, which can create an illusion of trading activity and disrupt the natural process of asset pricing

Binance will launch Self-Trade Prevention (STP), a tool that eliminates the possibility of matching and executing orders of the same trader (self-trading), which can be considered a type of market manipulation. The new feature will be available Jan. 26, according to a statement on the exchange's Web site.

Self-trading or "trading with oneself" occurs when the orders of a user or group of related users match their own orders. The same participant is on both sides of the transaction, so there is no actual change of ownership of the traded asset.

When self-trading is conducted intentionally to create the illusion of trading activity, it can be seen as a form of market manipulation, the report says. This can disrupt the natural process of price discovery and distort data on the price of an asset, supply and demand.

Intentional self-trading is prohibited under Binance's terms of use. However, not all such transactions are intentional. Some users using several different strategies at the same time may accidentally get two of their own orders matched. The new STP tool will allow API users (the interface that allows them to connect to Binance's servers and use the data they receive in external applications) to set up protections that will prevent any of their orders from matching each other.

As of January 26, Binance API users can use the new STP feature to prevent this type of transaction in spot trades. STP will block the execution of a maker order or a taker order, or both, depending on what the user specifies in the feature's settings.


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