BitMEX to curb order placement to guard against fat-finger errors

From February 16, the cryptocurrency derivatives exchange BitMEX will introduce a new rule to prevent so-called ‘fat finger’ input errors. The platform will limit opening positions that differ from the market price by 5% or more.

On 16 February, we’ll introduce a new rule to prevent so-called ‘fat finger’ input errors, which can result in sudden drastic price movements that disadvantage other users. Read more here: https://t.co/z8AJvTuJOY pic.twitter.com/fqe1orpTuT

— BitMEX (@BitMEX) February 2, 2021

Market and limit orders will be limited by the so-called Impact Price:

• Buy orders — by 5% above the best ask price or mark price (Mark Price), depending on which is higher.
• Sell orders — by 5% below the best bid or the mark price (depending on which is lower).

If the size of the market order is less than or equal to the accumulated size of orders in the order book (up to the maximum significant price), the requested order will be fully filled.

If the size of the order is greater than the accumulated size of available orders, the order will be filled only up to the maximum significant price, and the remaining portion of the order will be canceled.

“Although such errors are rare, they can cause sharp price swings, the exchange’s blog said. The mechanism protects not only the trader who placed the order but also other users.”

Some Twitter regulars criticized the BitMEX decision.

These are BULLSHITS! The fat fingering is part of the game. In all kinds of markets. In all exchanges. YOU CAN’T SET A RULE TO STOP IT!!
Do that and you will loose all of your customers including me.
There are people who need to get filled above or below 5% instantly.

— Crypto Realist (@CryptoRealistic) February 2, 2021

They say, “fat fingering is part of the game,” and excluding it would lead to losing customers.

Fat fingering is part of the fun. You know you’re alive when you just spent 10% of your account on trading fees for 1 trade.

— glimmery (@Glimmerycoin) February 2, 2021

As a reminder, in May 2020 The Bitcoin Manipulation Abatement LLC (BMA) filed a lawsuit against BitMEX, including allegations of manipulating the cryptocurrency market.

In October the exchange received a lawsuit from the US Commodity Futures Trading Commission for operating an unregistered trading platform and violations of CFTC rules related to KYC/AML procedures.

In November BitMEX was accused of the withdrawal of more than $400 million after information about an ongoing investigation was received.

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