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Some exchanges (including BitStamp, JustCoin, Kraken, and many others) charge a nominal 0.5% trading fee for matched orders. However, it is also possible to trade directly on the Ripple network with the same order book by using the Ripple client and setting the issuer to the respective exchange, thus avoiding the fee. Why would anyone pay a trading fee? (Other fees, like deposit/withdrawal transaction fees, make more sense to me.)

  • I believe Ripple Gateways can charge a fee on transactions with IOUs they issue. Are you sure the order book you see does not already reflect the exchange's fee? – Meni Rosenfeld Mar 19 '14 at 18:16
  • It might be the other way around - the order book I see on JustCoin seems to incorporate the exchange fee. JustCoin site bid/ask: 42904/43799.999 Ripple client JustCoin bid/ask: 43290.47619/43667.56 The spread for the order book on the Ripple client is lower. Note that JustCoin also charges an additional, separate 0.5% fee aside from the order book differences. – lid Mar 19 '14 at 18:27
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For the same reason you'd choose one exchange over another (in general) even if the other has lower fees. Examples of reasons not related to trading fees for which one might prefer a particular exchange:

  • Higher volume/liquidity
  • Better ergonomics
  • Faster trade execution
  • Easier deposits/withdrawals (especially when fiat is concerned)
  • More trading pairs
  • More reliable
  • I guess I wasn't clear enough... for these exchanges, you can simply set them as the issuer and the use their order books in the Ripple client, avoiding their trading fee you would incur by using their web interface (or API). – lid Mar 19 '14 at 15:36
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    @lid, you can do that, but for example to trade BTC/Bitstamp:USD/Bitstamp on Ripple has (in the past at least) not had the same spread or volume as trading BTC:USD on Bitstamp itself; thus you end up paying more on Ripple than the 0.5% fee when using Bitstamp's internal exchange (ignoring that Bitstamp gets 0.2% on Ripple). This is the "higher volume/liquidity" reason Tony gave. – dchapes Mar 19 '14 at 19:51
  • I see the opposite, at least for the JustCoin order book. JustCoin site BTC/Justcoin:XRP bid/ask: 42904/43799.999 Ripple client bid/ask: 43290.47619/43667.56 – lid Mar 19 '14 at 19:59
  • @lid Then there may be arbitrage opportunities, assuming you can execute all four transactions at the quoted prices simultaneously. – Snowbody Apr 4 '14 at 23:38
  • In one case, you're using the exchange's order book with offers placed on the exchange. In the other case, you're using the ledger's distributed exchange which is a completely different order book. – David Schwartz Jan 3 at 10:21

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