Smarkets bids to improve exchange ecosystem with new Pro Tier commission
New commission structure will affect 0.2% of users who “do not contribute fairly” to ecosystem
Smarkets has added a new commission tier that will penalise high-volume traders and scalpers in a bid to maintain a “fair exchange ecosystem”.
The new Pro Tier commission structure will apply to anyone who places more than 1,500 bets or stakes more than £1m in a calendar month.
Users in this category will have to opt in, and will then be charged 1% commission per transaction, whether it wins or loses, rather than 2% on net winnings.
Smarkets said the new tier was designed to generate more commission from certain types of users who “do not contribute fairly” to the exchange ecosystem, while ensuring that almost all customers are not affected.
CEO Jason Trost said in a blog post: “Our previous one-tiered commission system meant a big imbalance in the values of commission paid by some customers, regardless of volumes transacted.
“We need to rebalance the fees paid by these power-users, ensuring that what they pay is more aligned with how active they are on our platform. This is needed so that we are able to continue providing our industry-leading flat 2% commission rate to the vast majority of users.
“Talking to customers and looking at competitor models, most seem to agree that a rebalancing act is warranted.”
Smarkets said the new commission would apply to around 0.2% of the exchange’s users.
Industry veteran Mathew Trenhaile said the new tier would hurt “high-frequency bot fiends”, who are scalping both sides of a market for instance.
The new commission tier is the latest effort by the exchange industry to penalise users who skim a profit from markets and other users without providing any real liquidity benefits.
Matchbook also recently introduced a premium charge-style concept in the form of its ‘revenue share’ commission.