Conversation

If the price on kraken goes from $10k to $1 and then $10k while nowhere else moves and all margin longs on kraken itself are liquidated, would we agree that their order book malfunctioned and that something needs to change?

udiverse

@udiWertheimer

Depends on the circumstances. If there was an actual malfunction, yes. But if the markets are just inefficient because some large prop firm randomly shut down, and you think there’s such a sweet arb opportunity lying around, why complain to kraken? Go ahead and take it

You think if a prop firm going down on kraken caused all btcusd margin longs to get liquidated there, while a few arb firms profited, that the exchange would be not responsible?

Jesse Powell

@jespow

The exchange is not responsible for the price whatsoever. The exchange's responsibility is to match orders. The "price" (bid, ask, last trade, whatever) is set by the market participants, not the exchange. So, if the tech is working properly, the exchange is never responsible.

Noted. So if the price of btcusd went from $10k to $1 and back to $10k on btcusd on kraken while nowhere else moved, you'd consider that the forces of the free market and that margin longs on kraken should have done more due diligence, yes?

Amrullah

@Muhd_Amrullah

if all orders are matched properly, why should kraken be liable?

We are getting words confused here I think. I'm not arguing they should be legally liable. I'm saying if this were to occur on an exchange, it clearly means that exchange is unfit to have margin trading.

Jesse Powell

@jespow

So you're arguing for circuit breakers or limitations on order management to prevent a price from moving despite intent of the market participants? How do you know when your market is out of sync vs leading? How long do you wait to find out and who gets blamed when you're wrong?