Binance has launched a new and innovative feature known as "Indication of Interest" (IOI), designed to enhance the efficiency of institutional cryptocurrency trading, with the primary goal of enabling institutional clients to execute large trades with minimal market impact.
The advantages and operational scope
The new Indication of Interest (IOI) feature is available to eligible users in two main areas: Spot Trading and Fixed-Rate Crypto Loans.
* Spot Trading (Spot IOI): Users can express their interest in buying or selling large positions in cryptocurrencies at specific price levels, without it being a binding order.
* Crypto Currency Loans (Loan IOI): Allows borrowers and institutional lenders to tailor loan terms based on their capital needs.
Addressing liquidity challenges and price slippage
The feature targets one of the main challenges facing cryptocurrency markets, which is executing large trades without causing significant price slippage or revealing sensitive trading intentions of traders.
In traditional financial markets (TradFi), institutional traders heavily rely on Interest Indicators (IOIs) to gauge liquidity availability while minimizing market disruption. The Binance feature provides a similar mechanism for digital assets, which is particularly important for medium and small market cap tokens, where liquidity may be limited.
How it works
The system operates by allowing institutional participants to submit their interest indicators through Binance's Over-the-Counter (OTC & Execution Services) trading and execution services. This process grants institutions:
* Early visibility of liquidity: Before placing actual orders.
* Participating in private negotiations: With counterparties.
* Reducing risks of undesirable price movements: During the execution process.
Official statement and ongoing efforts
Catherine Chen, Head of VIP and Institutional at Binance, highlighted the importance of this launch, stating: "Binance continues to lead the development of institutional cryptocurrency trading by providing tools that prioritize liquidity and efficiency. Our interest indicator feature is a leading feature for a cryptocurrency platform, aligning with traditional finance (TradFi) standards and meeting the complex requirements of institutional traders who need to execute large transactions."
The launch of the IOI feature is part of Binance's broader efforts to support increasing institutional participation in digital asset markets, following previous upgrades to the Over-the-Counter (OTC & Execution Desk) trading and execution office, which included enhancing access to quotes from multiple liquidity providers to improve spreads, pricing, and execution speed.
