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FTX launches spot margin trading after UI lag fuels liquidations

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Popular crypto-derivatives exchange FTX was in the crosshairs earlier today after UI outages contributed to severe consequences for a few traders in the market.

According to a series of tweets, FTX was delayed in sending fill reports to users. This meant that most traders operated under the assumption that their orders didn’t go through when in actuality these orders had been filled already. This fill report lag resulted in many traders being over-leveraged in their positions, before being completely liquidated.

Further, record rates of volume per minute suggest that huge volumes were traded over a short period of time due to the resulting volatility.

While the actual matching engine, trades, and fills were running smoothly, the bottleneck in the fill reports still led to some traders facing massive losses.

In fact, many traders were so frustrated at the issue at hand that Sam Bankman-Fried, CEO of FTX, had to step in to address the UI lag.

SBF also suggested that FTX would look into cases where users intended to send closing orders, but due to delayed fill reports, sent opening orders instead to offer compensatory measures. FTX also announced VIP2 taker fees of 0.0275% for all users, an offer that will continue until the next day.

It will also be taking all the fees on FTX from the last 24-hours and doing a mid-week FTT buy/burn with it. This is anticipated to be around $1 million worth of burning.

FTX has quickly grown into one of the largest crypto-exchanges by volume over the past year with several unique product offerings, the most recent being the launch of spot margin trading.

Calling it a hybrid of how other places have done it, SBF explained that FTX’s spot margin trading will be automatically cross margined with futures in a sub-account.

“There isn’t a separate spot margin wallet or anything like that. We just add up your spot margin positions with your futures positions, and use remaining spot assets as collateral for both.”

However, even amidst these developments, it is unclear how the episode regarding delayed fill reports will impact FTX going forward as a lot of traders lost out heavily over the past 24 hours.


Samyuktha is a full-time journalist at AMBCrypto. Currently pursuing her Masters in Finance and Business Analytics, she is interested in cryptocurrencies, fintech, and blockchain technology adoption across various sectors.
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