Ranking Methodology Overview

A deeper dive into the key components and weightings that underpin our rankings.

- Ranking Components

- Due Diligence

- Market Quality (Trade and Order Book)

- Scoring and Grade System

- Components Breakdown (Spot and Derivatives)

Time Period: 01 April 2024 - 31 September 2024

Sources:
VASPnet regulatory database
LinkedIn profiles
Crunchbase profiles
Exchange sites & APIs
Github/other API documentation
Companies house
Media websites
MSB registries
Security registries
Independent auditors
Financial statements & attestations
Nansen
Semrush & SimilarWeb

Method: Manual Data Collection, Exchange Due Diligence Form, Partnerships, Exchange Data Sharing Agreements

Time Period: 01 April 2024 - 31 September 2024

Sources: CCData Exchange OHLCV Data, CCData Reference Rates (CCIX)

Market Quality: We evaluate the market quality of each exchange by evaluating volume, liquidity and price deviation via systematic metrics (derived from trade and order book data) to measure the cost of execution, liquidity, market stability, "natural" trading behavior.

Exchanges are evaluated based on their top five markets by trading volume and liquidity. Points are assigned using a proprietary mathematical function that considers the aforementioned data. This process results in a comprehensive ranking that remains robust across various markets for each exchange.

Time Period: 01 April 2024 - 31 September 2024

Sources: CCData Exchange Order Book Data

Market Quality: We leverage our market-leading order book data to provide unparalleled liquidity insights, enhancing market quality via granular liquidity data.

Utilising precise metrics such as slippage, spread, and depth calculated at granular intervals, and empowered by high-frequency, real-time updates and comprehensive smart snapshots, our tools offer in-depth analysis capabilities to assess the performance of exchanges across multiple levels of aggregation feeding into an overall Market Quality score.

CEX Methodology Overview - Data Collection

CEX Methodology Overview - Ranking Components

The overall ranking consists of the following components and subsequent weightings. Scores from each category are aggregated to form a total cumulative score. The maximum score is 100.

Score	Grade
>80	AA
75-80	A
65-75	BB
55-65	B
45-55	C
35-45	D
25-35	E
<25	F

CEX Methodology Overview - Components I

The methodology components break down the key metrics for evaluation within the Exchange Benchmark, driven by vigorous research and discourse with industry leaders, incorporating new developments and best practices to form an overall assessment of category risk.

Security

20%

Formal security certificate
SSL rating
Offline storage
Percentage of funds in cold wallets
Geographical distribution of keys
2 factor authentication (2FA)
Exchange hacks in last 2 years
Bug bounty programs (inc. max rewards)
Custody provider (regulated or not)
Off-exchange settlement
OTC services (NEW)

Legal/Regulation

15%

VASPnet - MSB or DX License
VASPnet - License Score
Legal entity identification
Part of regulatory/industry group
Insurance against losses (fiat and crypto)
Sanctions compliance statement
PEP compliance statement

KYC/Transaction Risk

15%

Market surveillance systems (Internal & External)
Transaction monitoring systems (Internal & External)
Maximum withdrawals after full KYC (NEW)
Maximum KYC requirements (NEW)
Strict KYC/AML procedure assessments

CEX Methodology Overview - Components II

Market Quality

25%

Depth Score (Liquidity, Slippage, Spread+)
Volume Score (Total, Adjusted, Volatility+)
Index Score (Deviation from References)
Market Maker Incentives
Flash Crash

Data Provision

10%

API average response time (ms)
Ability to query historical trades
Historical candlestick data
Granularity of candlestick data
Offers websocket or FIX connection
Provides order book API endpoint
Maximum order book level offered
API rate limits
Ease of API use
API data quality
API trading
API documentation quality

Transparency

10%

Available proof of reserves
Auditor attestation of reserves
Available proof of liability
Audited financial statements (and extent)
Management & ownership
Communication transparency

CEX Methodology Overview - Components III

Team & Exchange

5%

Identity of CEO, CTO, CCO, CISO
(or equivalent)
Education - Masters degree/formal post-graduate certification
Years of relevant experience
Customer service offerings
Institutional/corporate/retail offering

Negative Events

Penalty Factor -3%

Major Negative events
Minor Negative events
Type of negative events:
- Data breach,
- Major or minor fine,
- Withdrawal freezes,
- Awarded penalties
- Others

Derivatives Based Components

The methodology incorporates unique derivatives components, with key metrics of evaluation for this sub-section broken down below.

Market Quality

25%

Availability of an insurance fund
Socialised loss mechanism
Partial liquidation mechanism
Margin mechanics
Futures settlement mechanics
Future type availability
Option availability
Market maker incentives
Average volumes
Average open interest
Number of futures instruments
Number of options instruments

Data Provision

10%

Meta data availability
Historical backfill
Ease of API use
API data quality

Only the Market Quality and Data Provision categories have been changed for derivatives. The rest of the categories remains consistent between the spot and derivative Exchange Benchmark, including:

Security
Legal/Regulation
KYC/Transaction Risk
Transparency
Team & Exchange
Negative Events.