A market maker\u2019s job looks simple from the outside: keep buy and sell orders in the book and update them as the market\u00a0moves.<\/p>\n
What is less visible is everything that has to happen before those orders can be updated correctly. The strategy needs to receive the latest market data, decide how its prices should change, send instructions to the exchange and learn what happened to its previous orders. <\/em>All of that can happen through different connections with different speed, delivery and recovery characteristics.<\/p>\n So when a market maker evaluates an exchange, \u201cDoes it have an API?\u201d<\/strong>\u200a\u2014\u200ais only the starting point. The more useful question is whether the entire path from a market event to the next order is reliable enough to trade\u00a0on.<\/p>\n A simplified market-making cycle looks like\u00a0this:<\/p>\n market event \u2192 order-book update \u2192 pricing decision \u2192 order entry \u2192 execution \u2192 inventory update \u2192 next\u00a0order<\/strong><\/p>\n Every step depends on the one before it. If market data is late or incomplete, the pricing decision is based on the wrong market. If an order reaches the venue later than expected, the price may already be outdated. If a fill is not reflected quickly enough, the strategy can continue quoting without an accurate view of its inventory.<\/p>\n That is why connectivity is part of the trading system itself, not simply the technical work required to connect the system to an exchange.<\/strong><\/p>\n The stack can be simplified into 3 main\u00a0layers:<\/p>\n Market data. <\/strong>The strategy needs a current view of bids, asks and order-book changes. With incremental feeds, that usually means building a local book from a snapshot and applying every subsequent update in the correct sequence.Order entry.<\/strong> New orders, cancellations and amendments need a channel with low and, importantly, predictable latency. A strategy that cannot estimate when an instruction reaches the venue has a harder time controlling its exposure.Execution state. <\/strong>Acknowledgements, fills, partial fills and cancellations need to flow back quickly enough to update inventory and trigger the next\u00a0quote.<\/p>\n Different venues may expose these functions through WebSocket, FIX, REST, drop-copy feeds or other channels<\/strong>. What matters is not having the largest number of protocols, but using the right channel for each part of the trading\u00a0cycle.<\/p>\n Raw latency gets most of the attention, but synchronization can be just as important.<\/p>\n Consider an incremental order-book feed. If one delta is dropped and the consumer misses the gap, later updates can continue arriving normally. The connection still looks healthy, but the local book is now being updated from the wrong\u00a0state.<\/p>\n That creates one of the most dangerous situations for a market maker: the strategy keeps quoting, but the market it is quoting against is no longer the market the venue\u00a0sees.<\/strong><\/p>\n Recovery therefore has to be part of the design. The system needs to detect missing sequences, stop relying on corrupted state, retrieve a valid snapshot and rebuild the book before normal quoting\u00a0resumes.<\/p>\n There is no single architecture used by every venue. Current institutional offerings show several ways to separate market data, order entry and account or execution events.<\/p>\n WhiteBIT Market Making\u00a0Program<\/strong><\/a><\/p>\n rebates and discounts are based on the market maker\u2019s 30-day maker\u00a0volume;fees can go as low as -0.012% maker on both spot and futures, with taker fees from 0.020% on spot and 0.025% on\u00a0futures;the program includes API access, subaccounts and 24\/7 institutional support;qualification within the MM grid is based on a share of total volume rather than only a fixed absolute threshold.<\/p>\n Bybit <\/strong><\/a>Market Maker\u00a0Program<\/strong><\/p>\n the program covers Spot, Perpetuals\/Futures and Options, with market-maker levels reviewed\u00a0monthly;on Spot, qualification starts at more than $25M in 30-day trading volume for MM1, while higher tiers depend on maker-volume share or liquidity requirements;current Spot maker rebates range from -0.001% to -0.0075% depending on\u00a0tier;new market makers receive a one-month trial period, while institutional clients also get REST\/WebSocket API integration and dedicated support.<\/p>\n Bitget Market Maker\u00a0Program<\/strong><\/a><\/p>\n new market makers can qualify for an initial tier through account assets, proof of market-maker status on another exchange or existing maker volume; asset thresholds currently range from 50,000 USDT for Tier 5 to 2M USDT for Tier\u00a01;current Spot maker rebates reach -0.010% on Group A and -0.015% on Group B for Tier 1, while Futures rebates reach up to -0.010% depending on the pair\u00a0group;tiers are reassessed monthly using weighted maker volume and market-making performance;higher tiers also receive increased infrastructure capacity: Tier 1 UTA accounts can reach 300 API requests per second, alongside an institutional dedicated cluster and technical support.<\/p>\n The comparison is therefore broader than the headline maker rebate. A market maker is also choosing the qualification model, available infrastructure and the operating conditions under which its strategy will have to maintain liquidity.<\/p>\n For a market maker choosing a venue, a basic API checklist does not go far enough. The better questions are:<\/p>\n How does market data reach us? What happens if an update is missed? How do we send and cancel orders? How do we learn that an order has been filled? How do sessions recover after a disconnect? How quickly can we rebuild a trustworthy state?<\/strong><\/p>\n Those questions connect infrastructure directly to the job the market maker is trying to do: keep orders in the market while prices, executions and inventory are constantly changing.<\/p>\n A strong connectivity stack does not eliminate trading risk. It gives the market maker the information and execution channels needed to understand that risk fast enough to act on\u00a0it.<\/p>\n Disclaimer: This is not financial or investment advice. DYOR before making any decisions. Use at your own\u00a0risk.<\/em><\/p>\n From Market Data to Execution: How Market Making Works<\/a> was originally published in Coinmonks<\/a> on Medium, where people are continuing the conversation by highlighting and responding to this story.<\/p>","protected":false},"excerpt":{"rendered":" A market maker\u2019s job looks simple from the outside: keep buy and sell orders in the book and update them as the market\u00a0moves. What is less visible is everything that has to happen before those orders can be updated correctly. The strategy needs to receive the latest market data, decide how its prices should change, […]<\/p>\n","protected":false},"author":0,"featured_media":218034,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-218033","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-interesting"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/218033"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=218033"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/218033\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/media\/218034"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=218033"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=218033"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=218033"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}What happens before an order reaches the\u00a0book<\/h3>\n
Three Layers Behind Every\u00a0Quote<\/h3>\n
Why state consistency matters at\u00a0scale<\/h3>\n
Three connectivity stacks in\u00a0practice<\/h3>\n
Evaluate the path, not just the\u00a0API<\/h3>\n