Quote from: Indamuck on February 11, 2014, 01:09:46 AM

BFX,

You need to institute circuit breakers. They might look something like this:

Each day breakers are triggered when the market falls 20% (?) from the day's opening price. At any point when the market falls to -20% the minimum ask becomes -20%, fixed for a set period, say 30 minutes. After 30 minutes prices are then free to fall an additional 10% etc.

So take yesterday for example. Assume the opening (12:01am?) market level was $700. So if the market fell, the min ask would be $540. As the market collapsed below that offers would not be accepted below $540 but the system could accept all bids. In this way there is a 30 minute window for trades to be entered/matched in an orderly manner.

You can structure the circuit breakers to try and protect lenders, if that is your aim, but recognize that when you have a policy for managing fast markets, it is very bad form to change the rules on the fly.

Many markets use circuit breakers to positive effect. We are not inventing the wheel.

Today you basically raped traders to protect Bitfinex' lending function. Not sure why any trader would put themselves in that position again. I had submitted a Market Order to buy at about the $550 level ... thanks a lot.

Once again, imo the solution here is not flat 'circuit breakers' it is not the responsibility of the exchange to dictate fluctuations in price. There will be times the market fluctuates 10-20 in very short intervals, its the game were all playing and the nature of a free market.

The real problem that Bitfinex needs to take responsibility for is the potential for their own system to sink the market. I think the staff explained pretty clearly why they halted trading, cascading margin calls would have resulted in a temporary crash to 0. However in my case they halted trading resulting in my trailing stop buy not triggering when it should have reasonably triggered at 545 (if BTX followed stamp exactly).

A reasonable solution here would meet 2 criteria

1.) A solution in which market activity reflected a cross all exchanges is not inhibited

- Lenders seem to have a hard time with this one, the market will swing 10-15% if part of your funds are lost on a very natural market movement that is your responsibility as a lender, and you must own it. BFX kindly offers insurance which is an offer I think you would have to be crazy not to take.

2.) A solution in which the flaws of the BFX system are mitigated.

- The problem here is clearly that BFX sometimes must halt trading in order to protect lenders and traders. In forex/stock markets brokers hire 'market makers' in order to ensure things like this don't happen. In regulated markets 'circuit breakers' are also an option but I think most traders would feel uncomfortable with a centralized authority dictating when the market has 'moved too much'

As far as I've seen these are the reasonable solutions I've seen offered

1.) A breaker tied to the Bitcoin price index that will halt trading if BFX prices fall out of a certain range relative to other markets

2.) A market maker to ensure adequate buy/sell support at all time

3.) Scaled leverage option in order to encourage traders to enter a position on the less supported side of the market

4.) A simple option to temporarily turn off margin calls during periods where the system is at risk of cascading

I've enjoyed trading on finex although these system failures have manage to lose me about 2k today, the staff seems responsive and usually is able to come up with responsible and equitable solutions to these problems. However, in order for me to continue trading at BFX this is what I feel needs to happen immediately.

1.) BFX needs to come up with some sort of order of operations handling post crash halts. Many limit orders were executed for sub 200 dollars but b/c I used a trailing stop buy my buy order was ignored until after the halt. This doesn't seem fair b/c if BFX had followed Stamp exactly I should have bought out of my short at 545. They need a clear and transparent way for deciding who's orders get executed after a halt. Just the lowball limit orders (which would be bullshit imo that would just encourage people to take advantage of the system) the trailing stops, the stops, or just whoever put the order in first?

2.) BFX needs to come up with some way to warn customers that a halt is/may come under effect. IMO a gigantic fucking banner a cross the top of the website saying something like 'ALERT: Trading has been temporarily halted'. An email might be nice to.

I think these are pretty reasonable requests that should be fairly quick for the staff to implement, and would be a great service to both traders and lenders.