- Binance requires token issuers to disclose market maker identities and contracts.
- Profit-sharing and guaranteed return deals with liquidity providers is banned.
- Further warns that it may blacklist market makers involved in misconduct.
Binance has made the activity of the market makers stricter across its trading platform. New rules will compel token issuers to reveal the identity and legal entity of market makers and other terms of the contract as related to liquidity services. Binance noted that these actions are meant to tighten control over the trading partners and minimize risks associated with the presence of hidden incentives.
Binance also banned profit-sharing and guaranteed return arrangements between projects and liquidity providers. Exchange officials stated that such structures can create conflicts of interest that may affect fair trading conditions.
Binance Requires Disclosure and Bans Profit-Sharing Deals
Binance published the new framework in order to enhance transparency among the issuers of tokens and liquidity providers. The projects that have issued tokens in the exchange are now required to report on who their market maker is and provide contract-related information in the context of liquidity services.
There are also regulations of exchange that do not allow profit sharing or a guaranteed return model. According to Binance, these agreements can promote trading patterns that are driven by profit maximization as opposed to stable markets. The token lending agreements should also be able to explain the possible uses of borrowed tokens in the process of liquidity operations.
A Binance spokesperson said that the guidelines favor greater due diligence when projects choose market-making partners. The company representatives said that the goal is to create a healthy and effective marketplace. Officials also mentioned that the exchange will not condone any behavior that may compromise open trading.
Binance Warns of Action Against Irregular Trading Behavior
Additionally, Binance emphasized that market makers play an important role in maintaining active trading markets. Liquidity providers usually place buy and sell orders across order books to narrow spreads and reduce slippage. These activities help stabilize trading conditions when new tokens enter the market.
Monitoring of exchange has found instances where liquidity providers are more sellers than neutral trading participants. Binance added that the actions of selling that are inconsistent with token release schedules and the continued one-sided trading were also detected. The volume of trading, which moves upwards without automatic price action, also provoked questions of the possibility of artificial trading.
Meanwhile, Binance will pay close attention to the activity of market makers on its platform. Officials affirmed that the exchange has the capability of acting swiftly in case of misconduct emergence. This can be in the form of blacklisting market makers who break the new regulations or engage in manipulative trade.
Related: CZ Warns of Binance Listing Scams: Don’t Fall for Fake Connections
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