Spot trading fees have been compressing for three years. Derivatives have not, which explains why the last several notable exchange transactions have all been about acquiring an options or perpetuals book rather than a spot user base.
Concentration is a risk, not just a strategy
Open interest pooling into fewer venues improves execution and worsens systemic exposure. When a single venue holds a large share of a market's leveraged positioning, its risk engine becomes everyone's risk engine during a liquidation cascade.
What to check on a venue
Published insurance fund size and history, auto-deleveraging rules, and whether liquidation logic has been tested in a real gap rather than a simulation. Venues that publish post-mortems after volatile sessions are demonstrating something meaningful about their controls.
Consolidation itself is neither good nor bad. The disclosure standards of the consolidators are what determine which it turns out to be.
Fewer venues, deeper books
Consolidation improves execution for large traders and reduces the number of failure points regulators must monitor. It also concentrates counterparty risk.
The 2022 cycle showed how quickly a dominant venue's problems become everyone's problems. That memory should inform how this round is supervised.
