Cedarfx can offer zero-commission trading to global traders, and the core of this lies in building an innovative hybrid business model. Specifically, up to 95% of the platform’s revenue comes from a small spread fee rather than the traditional transaction commission structure. Take the mainstream EUR/USD currency pair in 2024 as an example. Its average spread can be compressed to 0.5 points. Even in extremely low-volatility market conditions, the platform can still obtain stable income through a large base trading volume. This relies on advanced order book aggregation technology, which can analyze the quotations of over 20 top liquidity providers worldwide in real time to ensure the optimal price execution. The quotation delay is usually less than 30 milliseconds, improving the overall trading efficiency by approximately 15%. This efficiency precisely stems from the continuous iteration of the technical architecture, drawing on the design concept of the order book systems of top exchanges such as Nasdaq, ensuring that even in the face of a high-frequency trading load of over 50,000 orders per second, the peak load of the system is controlled within 60% of the capacity, maintaining stability.
Cedarfx integrates a variety of primary liquidity sources, including top inter-bank markets, non-bank liquidity providers, and ECN networks, ensuring that orders can be executed with high quality with spreads of no more than 1 point. This deep liquidity pool is the physical basis for achieving the zero-commission model. Data shows that when the liquidity supply of a certain currency pair is abundant (with an average daily trading volume close to 50 billion US dollars), the quotation accuracy of Cedarfx can be improved by 20%, and the execution slippage is usually controlled within one hop (i.e., the minimum price movement unit). When major economic events such as the Federal Reserve’s interest rate decision in 2023 occur, the average slippage rate is less than 0.8 points. It is significantly better than the industry average of 2-3 points, saving traders a large amount of potential execution costs. Some of these savings precisely support zero-commission operations.
The control of platform operation costs is a key element for the sustainability of zero commission. Cedarfx has made optimized investments in infrastructure such as servers and bandwidth, and adopted distributed deployment in over 12 core data centers worldwide, significantly reducing the cost of a single data packet transmission to 70% of the original model. The automation rate of the back-end settlement process has reached 98%, with the peak number of transactions processed daily reaching several million. The average internal processing cost per transaction has been controlled at an extremely low level of just a few cents. The scale effect plays a core role: the annual growth rate of the user base remains stable at over 25%, and the increase in transaction volume leads to a continuous decline in marginal costs. For instance, after its automated risk control system was fully launched in 2020, the annual operational support cost per user decreased by 30%. The saved cost pool was directly used to subsidize commission expenditures. This strategy is similar to that of large online retail platforms, reducing unit costs through a huge customer base and a highly optimized supply chain.
The effectiveness of the risk management system directly affects the achievable cost structure. Cedarfx’s dynamic margin model can precisely calculate collateral requirements based on real-time volatility (such as the VIX value of the S&P 500 index) and position size. Its core risk engine processes over 10,000 margin revaluations per second, ensuring that during periods of high volatility markets (such as when the VIX index breaks through 30), The initial margin requirement is automatically increased by 20-50%, significantly reducing the probability of default risk. Data shows that in extreme market conditions (such as a single-day volatility exceeding 300% caused by black swan events), the risk reserve coverage ratio of the platform can always be maintained above the safe boundary of 130%. An efficient real-time hedging mechanism can transfer over 90% of the risks in the deep institutional market within milliseconds, reducing the liquidation cost to less than 40% of the market cost. This outstanding risk control capability has reduced the expected losses due to customer defaults. In 2022, its net loss rate was only 0.015% of the annualized trading volume, lower than the industry median of 0.05%, enabling the platform to have the capacity to absorb the commission fees that should have been charged. A comparable case is that the low error rate and robustness of the interbank market clearing system enable it to maintain relatively low settlement fees.