Michael Karczewski’s expert view on the importance of market making on cryptocurrency exchanges in the Finance Magnates Intelligence Report Q1 2019
“One of our main advantages is that we are able to provide liquidity also on local currency crosses such as BTCAUD, CTCCAD, BTCPLN, which is very often a big challenge for the exchanges to find such liquidity solution.
The second biggest advantage is that in contrast to the competition, we open an account on an exchange for which we do market making. As the majority of liquidity providers use the ex-post hedging model, which means that the execution of a trader’s market order is done first inside of an exchange’s matching engine and then sent to a liquidity provider. This causes slippage risk, and as an exchange, you need to send a significant amount of margin to LP. In our model, from our account, we place limit orders directly in the exchange’s order book, which means that there is no slippage limit and we do not require any margin to be placed by an exchange.
We are also technology agnostic, we are able to integrate with different APIs, which are used by exchanges, however, of course, it can take a little bit longer if the client is using a non-standard API specification. Our algorithms are based on liquidity from various sources, mainly from US exchanges, which allows us to provide very competitive spreads and volumes for our clients“– Michael Karczewski, Head of Business Operations at Match-Trade Technologies