Why Low Taker Fees Matter When Trading Crypto Derivatives
The world of crypto derivatives has come a long way since CME futures entered the market, and the likes of BitMEX introduced perpetual swaps with up to 100x leverage, providing financial contracts between two or more parties based on the future price of a digital asset.
Now there are dozens of increasingly popular platforms, both from legacy finance and crypto-native, providing convenient futures, forwards, swaps, and options contracts to help hedge the risk of price fluctuations or speculate on the price of a variety of underlying assets over time.
The Importance of Low Taker Fees
Taker fees are due when traders remove liquidity from the order book of exchanges by making immediate market orders. They contrast against maker fees that add liquidity to an order book through limit orders that do not fill immediately. As such, taker fees are commonly more expensive than maker fees and may add up considerably over time. This structure increases the importance of low taker fees in what is a comparably high volatility crypto market, where the speed of execution can be vital.
Compounding this importance, bid/ask spreads can increase the cost of executing trades, though this has significantly improved in recent years as market liquidity has strengthened. Some derivative products like perpetual swaps also require regular funding payments depending on the balance of the order books and whether a position is on the long or short side. There are also deposit and withdrawal fees to consider. All of which can eat into profits or add to losses if not sufficiently competitive.
Crypto Derivatives Exchanges with the Lowest Fees
Trading fees should, therefore, be one of the first considerations when selecting a crypto derivatives exchange. The following are the lowest taker fee platforms currently available on the market today:
Having developed a dominant position in the global crypto spot market, Binance then leveraged its growth to become one of the highest volume crypto derivatives platforms, providing futures, options, and leveraged token products. Binance offers up to 125x leverage, with futures taker fees of 0.04% across hundreds of market pairs. The UI can lag at times, however, and there are some regions excluded from the platform.
Huobi Global offers another of the highest volume crypto derivatives platforms, though the Singapore-based exchange is more skewed toward the Asian market, despite its name. Huobi provides futures, swaps, and options derivative products, with up to 125x leverage depending on the market. Futures taker fees are also 0.04%, though it charges higher delivery fees if users fail to close positions before the contract expires.
A relative newcomer to the market, Bingbon finds itself in the top three of crypto derivatives exchanges in terms of low taker fees, charging a competitive 0.045% to its expanding global customer base, with up to 150x leverage. Bingbon is also unique amongst its low-fee competitors as it offers a social copy trading service to manage positions passively with some of the top traders on the platform. Forex, global indices, and commodities instruments are also available, wrapped up in a visual and intuitive interface.
OKEx is also a top-tier crypto derivative platform by volume, though it has suffered withdrawal issues of late due to an ongoing legal dispute. OKEx offers an extensive range of trading pairs and provides futures, swaps, and options products, with up to 125x leverage in relevant markets. OKEx futures offer a taker fee of 0.05%, though again with higher than average delivery fees if necessary.
BitZ reports relatively large trading volumes, over half of the daily volume level of OKEx, for example. These levels are contested, however, for the lesser-known platform has struggled to gain traction. BitZ offers perpetual swap derivatives with a 0.06% taker fee at up to 100x leverage. The platform is user-friendly, with comparatively low trading fees. However, it fails to stack up against its competitors in this comparison.
Another newcomer, BaseFEX, launched in 2018, offering swaps and futures with no KYC requirements and up to 100x leverage on its BTC/USD perpetual contract. The crypto derivatives exchange charges competitive taker fees at 0.06%, though daily volumes are considerably lower than its low-fee counterparts, potentially making trade execution more challenging for the platform’s users.
The importance of a low fee structure cannot be overstated. Each platform presents its own set of strengths and weaknesses to assess. Binance and Huobi offer greater levels of liquidity for high volume traders, for example, whereas newer operators like Bingbon provide a compliant platform and extensive feature sets within a simple UX that may be more beneficial for new or more passive traders.
The decision-making process will depend on the circumstances of each individual, based on a wide range of considerations, but fee comparison is a great place to start.