In January 2023, Binance unveiled its Self-Trade Prevention (STP) mechanism, designed to thwart the execution of orders that might result in self-trades. Binance, the cryptocurrency exchange giant, has expanded its arsenal of tools to curb unnecessary trading fees arising from unintentional self-trades. This essential STP feature will be available to all spot and margin traders on Binance starting October 26, as per the official blog announcement made on October 11.
Once the integration is complete, the default mode for all trading pairs and orders on Binance’s spot and margin trading platforms will be the “expire maker” STP mode. When the STP function goes live, users will have the ability to review orders that have expired due to this feature, accessible on the Binance official website, Binance App, and Binance Desktop App through the transaction history page.
The STP functionality, introduced by Binance in January 2023, aims to prevent self-trades and is primarily geared towards application programming interface (API) traders. API traders often employ automated trading programs that interact with the exchange’s trading engine, and self-trading can be an inadvertent consequence.
Self-trading can manifest when an API user, or a group of interconnected users, engage in trades with themselves, whether intentionally or not. The STP empowers API traders to avoid such accidental self-trades, ultimately assisting users in sidestepping fees associated with these unintended transactions.
Binance highlighted the importance of STP by explaining the risk of unintentional self-trades in a competitive marketplace. For instance, when orders from separate trading units of the same firm, using the same unique UID but employing unrelated trading strategies, happen to post orders that trade with each other. Binance underscores the significance of preventing these scenarios to maintain market integrity.
In addition to addressing unintentional self-trading, Binance unequivocally prohibits intentional self-trades, which are seen as a form of market manipulation. When self-trades are executed intentionally to create a false illusion of trading activity, it constitutes market manipulation. To tackle this, Binance has a dedicated market surveillance team that actively monitors trading activity, specifically to identify intentional self-trades and other forms of market manipulation. Binance possesses a suite of tools to track and investigate those who engage in such activities.
As mentioned earlier, Binance had initially introduced the STP feature for USD-margined futures on API in August 2023. It’s important to note that the STP function is optional and only becomes active when users opt to enable it.