# OTC or exchange: which is better for a large crypto sale? An exchange suits a sale the order book can absorb near the current price; OTC suits a sale larger than that depth. How to find where the line falls. --- An exchange is the better route for a crypto sale that the order book can absorb close to the current price, and an over-the-counter (OTC) trade is the better route once the sale is larger than that depth, because a single negotiated price replaces the cost of pushing the market down as you sell. The line between the two is not a dollar figure: it is the size of your sale measured against the liquidity of the asset you are selling, and it can be estimated before you commit to either route. Price is only one of the five things that differ. The two routes also differ in who learns that you are selling, in how the fees are charged, in who holds your assets and for how long, and in how certain the proceeds are before you start. Every price, order book, spread, fee and volatility figure in this article is an illustration built to show the method. None is a statement of what exchanges or desks charge, and none is market data.
$3M to $6Mis where the cheaper route flips from the exchange to the desk on the illustrative order book used here
8xis how much the dollar cost of market impact grows when a sale is four times larger, under a square-root impact rule
$52,000is one standard deviation of market risk on a $6,000,000 sale worked over six hours, to save about $4,700

Arithmetic on the illustrative sale used throughout: units of an asset with a mid price of $100, a 3% daily volatility and the order book shown below.

## What is the difference between selling on an exchange and selling OTC? Selling on an exchange means placing an order in a public order book, where it is matched against the buy orders of many participants at whatever prices they have posted; selling OTC means agreeing one price for the whole amount with one counterparty, away from the book. An order book is the list of resting buy orders (bids) and sell orders (asks) on an exchange, ranked by price. The mid price is the midpoint between the best bid and the best ask. An OTC desk is a firm that quotes a price to clients for a stated size, either as principal, taking the other side itself, or as agent, finding the other side for a commission. A seller in fact has three routes, because an exchange can be used in two ways: one market order that sells everything at once, or a worked order that sells in slices over hours or days. The table sets the three against the same criteria. | Criterion | Exchange, one market order | Exchange, worked order | OTC, one negotiated price | | --- | --- | --- | --- | | Price for the full size | Unknown until the order has finished filling | Unknown until the last slice is sold | Known before you accept | | Main cost | Slippage through the book, plus a trading fee | Smaller slippage, a trading fee, and market risk while selling | The desk's spread, or a commission | | Who sees the sale | Every participant, as it happens | Every participant, if the pattern is noticed | The desk or desks you ask | | Time to complete | Seconds | Hours to days | Minutes to agree, then settlement | | Where your assets sit | On the exchange, before and during the sale | On the exchange, for the whole period | With you until settlement, then with the counterparty | | Counterparty | The exchange, as venue and holder of your balance | The exchange, as venue and holder of your balance | The desk, for the leg delivered first | ## What does a large sale cost on an exchange order book? A large sale on an exchange costs the slippage plus the trading fee, and the slippage grows faster than the size of the sale. Slippage is the gap between the mid price when you start and the average price you actually receive as your order consumes one level of bids after another. A sale that fits inside the best bids pays almost none; a sale that reaches deep into the book pays it on every unit beyond the first levels. Take an asset with a mid price of $100, so that one basis point, a hundredth of a percent, is one cent per unit. The bid side of the book, invented for the example, holds eight levels. | Bid price | Distance below the mid | Units at this level | Cumulative value at the mid | | --- | --- | --- | --- | | $99.98 | 2 basis points | 4,000 | $400,000 | | $99.95 | 5 basis points | 6,000 | $1,000,000 | | $99.90 | 10 basis points | 10,000 | $2,000,000 | | $99.80 | 20 basis points | 15,000 | $3,500,000 | | $99.65 | 35 basis points | 15,000 | $5,000,000 | | $99.45 | 55 basis points | 25,000 | $7,500,000 | | $99.20 | 80 basis points | 25,000 | $10,000,000 | | $98.90 | 110 basis points | 50,000 | $15,000,000 | A treasury wants to sell 60,000 units, a position worth $6,000,000 at the mid. One market order for the whole amount takes the first five levels in full and 10,000 units of the sixth. The first 4,000 units sell 2 basis points under the mid and the last 10,000 sell 55 basis points under it. The average price is about $99.748, the gross proceeds are $5,984,870, and the slippage is $15,130, or 25.2 basis points of the position. With an illustrative taker fee of 0.06% of the proceeds, $3,591, the sale costs $18,721 against the mid and the treasury receives $5,981,279. Two limits apply to any reading of a displayed book. The first is that the book is a snapshot: orders can be cancelled the moment a large sale starts to consume them, so the depth you see is the most you can count on, not the least you will get. The second is that the last price you sold at, $99.45 here, is where the market now stands for everyone watching. Research on market impact gives the general shape of that cost. A paper published in Physical Review X in 2011 by a group of researchers at a quantitative asset manager describes what the field calls the square-root impact law: the price impact of a large order grows roughly with the square root of its size relative to the volume the market trades, not in proportion to it. A sale four times larger has about twice the impact per unit, and because that impact applies to four times as many units, about eight times the cost in dollars. ## What does the same sale cost at a single negotiated price? At a single negotiated price, the sale costs the spread the desk quotes on the full size, and that cost is known before you accept. The spread is the gap between the reference price and the price the desk pays you; it is how a principal desk is paid for buying a position it must then sell, hold or offset. Suppose a desk quotes the treasury a firm bid 22 basis points under the mid for all 60,000 units, a price of $99.78. The proceeds are $5,986,800 and the cost is $13,200, with no separate trading fee. Against the single market order, the negotiated price leaves the treasury $5,521 better off. The more important difference is in what the treasury knows and when. The market order's cost of $18,721 is an estimate until the order has filled, and it is a best case if bids are withdrawn. The desk's cost of $13,200 is a commitment for as long as the quote is valid. In return, the desk takes on the position and the task of disposing of it, at its own risk. A desk's spread is not flat. It usually widens with size, with the asset's volatility and with how hard the position is to offset, and many desks set a minimum trade size below which they do not quote or do not quote keenly. Both facts shape the comparison by size that follows. ## At what size does the answer change? The answer changes at the size where the slippage on the order book, plus the exchange fee, exceeds the spread a desk quotes for the same amount. On the illustrative book and quotes used here, that happens between $3,000,000 and $6,000,000; on a more liquid asset it happens at a far larger size, and on a thinly traded token at a far smaller one. The chart applies the same book and the same 0.06% taker fee to five sale sizes, against an illustrative desk schedule of 15 basis points up to $1,000,000, 18 at $3,000,000, 22 at $6,000,000 and 30 at $12,000,000.
Cost of a sale by size: one exchange market order against a desk's negotiated priceBasis points of the position's value at a mid of $100; illustrative order book, fee and desk spreads
Exchange, one market orderOTC desk, negotiated price
$250K 8.0 15 $1M 9.8 15 $3M 17.3 18 $6M 31.2 22 $12M 60.5 30

Exchange bars are slippage through the displayed book plus a 0.06% fee on proceeds. Desk bars are the quoted spread with no further fee. Withdrawal, network and banking charges are excluded from both.

The desk's cost rises gently with size, since the desk can take time to dispose of the position, while the market order's cost accelerates, since every additional unit is sold at a lower level than the one before. At $12,000,000 the market order costs $72,541 and the desk $36,000, a difference of $36,541 on one sale. The crossing point is a property of the asset, not of the seller. Two measures locate it for any asset. The first is displayed depth: the value of bids resting within the distance from the mid that you are willing to give up. In the example, a seller prepared to pay about 18 basis points all told can sell roughly $3,000,000 at once. The second is participation: your sale as a share of the volume the asset trades in a day across the venues you can reach. A sale that is a small fraction of a day's volume can be absorbed; a sale that is a large share of it cannot be hidden or hurried. ## Can working the order over time beat both? Working the order on an exchange in slices can cost less than both the single market order and the desk's spread, and it replaces the cost it saves with market risk that is usually many times larger. The seller who works an order keeps the position, and the exposure to its price, until the last slice is sold. Suppose the treasury sells its 60,000 units in 12 slices of 5,000, one every half hour over six hours. Assume, generously, that the book refills between slices, and that the selling pushes the mid down by 1 basis point after each slice. Each slice takes 4,000 units at 2 basis points under the prevailing mid and 1,000 units at 5 basis points under it. | Line | One market order | Worked over six hours | Desk's negotiated price | | --- | --- | --- | --- | | Slippage or spread | $15,130 | $4,859 | $13,200 | | Exchange fee at 0.06% | $3,591 | $3,597 | none | | **Cost against the starting mid** | **$18,721** | **$8,456** | **$13,200** | | Cost in basis points | 31.2 | 14.1 | 22.0 | | Proceeds | $5,981,279 | $5,991,544 expected | $5,986,800 | | Price certain before selling | No | No | Yes | The worked order is expected to beat the desk by $4,744. The word expected carries the weight. If the asset's price moves by 3% in a typical day, the average price of an order spread evenly over six hours has a standard deviation of about 0.87% around the starting price, which is about $52,000 on a $6,000,000 position. The treasury would be carrying a risk roughly eleven times the saving it is working for. That risk runs both ways, and a seller with no deadline and a tolerance for the swing may reasonably take it. A treasury that must report a known amount, or a fund selling to meet a redemption on a fixed date, usually cannot. The refill assumption matters as well. If buyers do not return between slices, the worked order's slippage climbs toward the market order's, and the exposure remains. Many desks and brokers also offer agency execution: they work the order across venues for a commission and report the result against a benchmark, and the market risk stays with the client. ## Where does information leak on each route? Information leaks to the whole market on an exchange and to the firms you ask on the OTC route, and in both cases the cost of the leak is a lower price before you have finished selling. On a $6,000,000 sale, each basis point the market moves against the seller before execution is worth $600. On an exchange, the leak is the order itself. A large resting sell order is visible to everyone, and a market order that sweeps six levels is reported in the public trade feed at once. A worked order hides the total, yet a regular pattern of same-sized sales at fixed intervals can be recognised by other participants, who lower their bids ahead of the next slice. On the OTC route, the leak is the request. Each desk asked for a price learns the asset and usually the size, and often the direction. Asking more desks improves the competition and widens the circle of firms that know, which is why sellers usually ask a small number at the same moment. Regulators have looked at what a dealer may do with that knowledge before the trade is agreed. The International Organization of Securities Commissions, in its final report on pre-hedging published in November 2025, defines pre-hedging as trading by a dealer acting as principal, after it receives information about an anticipated client transaction and before the client has agreed the terms, to manage the risk of that transaction and with the intention of benefiting the client. Its recommendations are addressed to regulators and include clear disclosure of a dealer's pre-hedging practices to clients and prior client consent. Whether and how those recommendations apply to a given crypto desk depends on its jurisdiction, so a seller is entitled to ask the desk directly. ## How do the fees compare? Exchange fees are published and charged separately from the price, while an OTC desk's remuneration is usually inside the price it quotes. The two have to be converted to the same basis, total cost against one reference price at one moment, before they can be compared. On an exchange, the visible fee is the trading fee, typically charged as a percentage of the value traded and typically lower for orders that rest in the book (maker orders) than for orders that take liquidity from it (taker orders), with schedules that fall as monthly volume rises. Around it sit the charges for moving the assets in and the proceeds out: network fees on the deposit, a withdrawal fee, and bank charges if the proceeds leave as fiat currency. On a large sale these are small next to slippage. In the example, the fee is $3,591 of the market order's $18,721. On the OTC route, a principal desk normally quotes an all-in price, so the spread is the fee. An agent or broker charges a commission on top of the price obtained, and that commission should be stated as a rate and as an amount before the trade. The usual error is to compare the desk's 22 basis points with the exchange's 6 basis point fee and conclude that the exchange is cheaper, leaving slippage out. ## How do counterparty and settlement differ? On an exchange, your counterparty for custody is the exchange, which holds the assets before the sale and the proceeds after it; on the OTC route, your counterparty is the desk, for whichever leg is delivered first. An exchange requires the assets to be on the venue before they can be sold. The full position therefore sits in an account you do not control from the deposit until the proceeds are withdrawn, which for a worked order may be days, and withdrawal limits or reviews can extend it. The International Organization of Securities Commissions, in its policy recommendations for crypto and digital asset markets published in November 2023, grouped its 18 recommendations into six areas, among them conflicts of interest arising from the vertical integration of activities and functions, and custody and client asset protection. Those two areas are the ones a large seller should ask an exchange about: which functions the group combines, and how client assets are held and segregated. An OTC trade settles after the price is agreed, by transfers between the two parties or through a custodian or settlement agent. The exposure is concentrated in a short interval and in one firm, and it is governed by the agreement between you: who delivers first, within what time, and what happens if one side is late. ## When is an exchange the better route for a large sale? An exchange is the better route when the sale fits inside the displayed depth at a cost you accept, when the asset trades in volume many times your size, or when you have the time and the mandate to carry market risk while an order is worked. Four situations point that way: - The sale is a small share of the asset's daily volume and of the bids near the mid, as with the $250,000 and $1,000,000 sales in the chart. - The seller already holds the assets on the venue, with an account, limits and banking arrangements in place, so no onboarding stands between the decision and the sale. - A public, timestamped execution price is useful in itself, for a valuation policy or an auditor. - The position is below the minimum size at which desks quote competitively. An exchange route does not have to mean the public book. Some venues offer a request-for-quote or block facility that returns one price for a stated size, which brings the certainty of a negotiated price inside the venue's custody and fee structure. ## When is OTC the better route? OTC is the better route when the sale exceeds the depth available near the mid, when the proceeds must be known in advance, or when the asset or the terms do not suit an order book. Four situations point that way: - The size is a large share of displayed depth or of a day's volume, as with the $6,000,000 and $12,000,000 sales in the chart. - The seller needs a fixed amount by a fixed date: a payment obligation, a redemption, a reporting cut-off. - The asset is thinly traded, locked or restricted, so that the book holds little or the sale needs terms a book cannot express, such as instalments or a price formula. - The seller wants proceeds in a currency or bank arrangement that the available exchanges do not support. The OTC route has limits of its own. A desk may decline to quote an illiquid asset, or quote a spread wider than the cost of patient selling, and onboarding with a desk takes time before the first trade. ## How do you decide for a given sale? You decide by pricing the exchange route yourself, asking for a firm quote on the same size at the same moment, and choosing on total cost and certainty together. The exchange estimate is the benchmark that makes any desk's quote readable.
A decision method for one large saleWorked on the illustrative sale of 60,000 units at a mid of $100
  1. Fix the referenceRecord the mid price, its source and the time. Every route is measured against it. Here: $100, so the position is worth $6,000,000 and one basis point is $600.
  2. Measure the size against the marketCompare the sale with the bids resting near the mid and with a day's traded volume on the venues you can use. Here the sale exceeds the $5,000,000 of bids within 35 basis points; against an assumed daily volume of 2,000,000 units it is 3% of a day.
  3. Price the market orderWalk the displayed bids for your size and add the taker fee. Here: $15,130 of slippage plus $3,591, or 31.2 basis points. Treat it as a best case.
  4. Price the worked order and its riskEstimate the cost of selling in slices, then the swing in the average price over the period. Here: 14.1 basis points expected, with a standard deviation of about $52,000 over six hours.
  5. Ask for firm quotes on the full sizeRequest quotes from a small number of desks at the same time, with the settlement terms stated. Here: 22 basis points, $13,200, proceeds of $5,986,800 known in advance.
  6. Choose on cost and certainty togetherIf you cannot carry the swing, the choice is between the market order and the desk, and the desk is $5,521 better. If you can, the worked order is expected to save a further $4,744 and may cost far more.
  7. Write down the reasonKeep the reference, the three estimates, the quotes received and the choice made. The next sale starts from this file.
The routes can also be combined. A seller can place part of the position with a desk at a firm price and work the remainder, or sell on an exchange up to the depth that costs less than the desk's spread and negotiate the rest. On the example book, the first 30,000 units cost 17.3 basis points on the exchange, about the same as a desk; it is the second 30,000 that make the market order expensive. ## What should you measure after the sale? After the sale, measure the implementation shortfall: the difference between the value of the position at the reference price when you decided to sell and the proceeds you actually received, net of every fee. That one figure makes sales on different routes comparable and shows over time which route your sizes belong on. For the treasury's sale through the desk, the shortfall is $13,200, or 22 basis points, against the mid recorded in step one. Three records make the figure trustworthy: the reference price with its source and timestamp, taken before any desk was contacted; the quotes received, with their validity and settlement terms; and the fills or the trade confirmation, with every fee itemised. Kept over several sales, they show for each asset roughly the size at which the order book stops being the cheaper route.