Post
Topic
Board Economics
Re: Why are exchange fees so high and charged by %?
by
Picklee
on 24/03/2013, 21:45:54 UTC
I don't understand why an exchange like cavirtex needs to charge such a high fee per trade, and why that fee needs to be charged as a % of the transaction? Even Gox charges a %. I am aware there are costs in running an exchange but these exchanges should be mostly automated by machines.... So why does it cost so much more to facilitate a $1000 trade vs a $1 trade? It's just a computer processing a different number, there is no need for it to cost so much extra.

To be fair, it is not only computer processing. Legitimate exchanges like VirtEx and Mt.Gox still have to operate within legal frameworks depending on where the customer is. And remember that big exchanges are the glue between the bit coin network and the fiat markets, which are heavily regulated. I know that Virtex spends a lot of their money on legal and consulting fees.

As far as fees go, the proportional fee structure makes it cheaper for smaller trades to occur. On other markets, like TSX or NYSE, brokers generally charge flat fees between $4-$10 which is better for large volume trades. VirtEx fees are insane; though, I still profit from using their services.