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Binance MirrorX is an off-exchange settlement solution that allows institutional investors to invest and trade using cold custody. The service is based on Binance Custody, a regulated institutional digital asset custodian, and involves mirroring cold-storage assets through 1:1 collateral held on a Binance account.
MirrorX positions are automatically settled off-exchange at T+1, free of charge, and all products and services on the Binance Exchange can be accessed while assets remain secured in segregated cold wallets.
The solution enables more security, allowing traders to access the exchange ecosystem without having to post collateral directly on the platform.
The difference between on-exchange and off-exchange settlement
On-exchange and off-exchange refer to the way financial assets are traded. On-exchange trading refers to the trading of financial assets on a centralized exchange, while off-exchange trading refers to the trading of financial assets outside of a centralized exchange, usually through over-the-counter (OTC) markets. Here are some differences between on-exchange and off-exchange settlement:
- Trading takes place on a centralized exchange.
- The exchange acts as a counterparty to all trades.
- Trades are cleared and settled through the exchange’s clearinghouse.
- The exchange sets the rules and regulations for trading.
- The exchange charges fees for trading and clearing services.
- The exchange provides transparency and price discovery.
- Off-Exchange Settlement:
- Trading takes place outside of a centralized exchange, usually through OTC markets.
- Trades are bilateral agreements between two parties.
- Trades are not cleared and settled through a clearinghouse.
- Parties negotiate the terms of the trade, including price and quantity.
- There is less transparency and price discovery.
- Parties may use intermediaries to facilitate trades.
- Parties may face counterparty risk.
- Parties may face higher transaction costs.
- It is worth noting that some financial assets, such as derivatives, can be traded both on-exchange and off-exchange