Binance, the leading global cryptocurrency exchange, is taking steps to rectify a vulnerability within its Link Plus program that allowed prime brokerages to generate extra income at the expense of Binance. The adjustments to Link Plus, a platform utilized by prime brokers to manage institutional client accounts, are set to commence on July 1. Some organizations took advantage of Link Plus to provide clients with fee reimbursements that exceeded their actual trading volumes, as per sources familiar with the matter.
Reports suggest that Binance's modifications to Link Plus could impact the earnings of numerous prime brokers who exploited the system to offer competitive commissions and capitalize on Binance's tiered fee system. A Binance representative mentioned that the company had notified businesses participating in the Link Program since last year about the implementation of enhanced compliance standards and alterations to harmonize the fee structure for Link end-users, ensuring transparency and equity.
The highest tier, 'VIP 9,' on Binance offers users trading a minimum of $4 billion monthly significantly lower costs compared to other clients. Prime brokers often reached this tier by consolidating accounts from multiple clients, enabling them to trade at reduced fees while charging higher fees to their clients, thus profiting from the margin.
The modifications will directly link prime broker clients to the tier corresponding to their Binance trading volumes, thereby eliminating the practice of aggregating client accounts. Consequently, numerous prime brokers are anticipated to lose their top-tier privileges. Bequant, a crypto trading service based in Malta, is transitioning its focus to primary trading activities as its core business model revolves around leveraging Binance's fee structures for arbitrage purposes, as stated by CEO George Zarya.
Moreover, Binance has announced its intention to restrict the utilization of account features that grant specific users an unfair advantage, emphasizing that this initiative is distinct from the redesign of the Link Plus interface.
