Self-Trade PreventionSTP
Self-trade prevention is an exchange feature that stops a trader’s buy and sell orders from executing against each other, which would create artificial volume.
Self-trade prevention stops your own buy and sell orders from trading with each other. A self-trade changes no ownership but prints volume, so exchanges offer tools to block it and regulators expect firms to watch for it. The exact rules differ by country and venue.
- Category
- Market Structure
- Reading time
- 3 min
- Also called
- Self-match prevention, Wash trade prevention
- Updated
Self-trade prevention in plain words
Some futures exchanges offer an optional self-match prevention tool that stops orders from accounts with the same owner from trading with each other.1
Some crypto exchanges forbid self-trading entirely: when two orders from one user would match, neither fills.2
In the US, FINRA firms must have procedures to monitor for and prevent repeated self-trades coming from one algorithm or trading desk.3
How self-trade prevention works
Tag your orders
Orders carry an ID shared by accounts with common ownership.
Engine checks
Before a match, the venue compares IDs.
Detect a self-match
Turn on the exchange's self-match prevention for accounts you own in common.1
Cancel one side
Choose which order gets cancelled — the resting one or the incoming one.1
Default rule
Know the default: if you don't choose, the exchange cancels the resting order and processes the new one.1
Taker decides on some venues
On some venues, the newer (taker) order's instruction overrides the resting order's.2
Worked examples
Example 1 — Two algorithms
BlockedHypothetical: algo A rests a sell of 50 at 101.00; algo B, same firm, sends a buy at 101.00.
| Trade | None — blocked |
The matching engine cancelled one of the orders, following the chosen instruction.1
Example 2 — Default
Resting cancelledNo instruction is sent.
| Cancelled | Resting order |
With no instruction set, the resting order was cancelled and the new order went ahead.1
Example 3 — No STP
Compliance riskHypothetical firm self-trades 10,000 shares a day.
| Real ownership change | 0 |
Firms are expected to spot and stop repeated self-trades from one algorithm or desk.3
Self-trade prevention vs wash trading
| Aspect | Self-trade prevention | Wash trading |
|---|---|---|
| What it is | A safety tool | Manipulation |
| Intent | Avoid accidental self-matches | Fake volume |
| Status | Encouraged | Illegal in regulated markets |
| Who runs it | Venues and firms | Bad actors |
Where STP matters
Algo trading
Many strategies in one firm placing Limit Order orders.
Volume quality
Keeping Volume honest.
Crypto
Settings on a crypto Exchange.
Market making
A Market Maker quoting both sides.
Advantages and disadvantages
Advantages
- Prevents fake volume.
- Protects firms from compliance issues.
- Simple to configure on many venues.
Disadvantages
- Cancelled orders may hurt strategy fills.
- Settings differ by venue.
- Does not stop deliberate manipulation across firms.
- Rules differ by country.
Going deeper
Read as far as you need. Each level builds on the one before it.
Purpose
Beginner
Self-match prevention is an optional tool that keeps commonly owned accounts from trading with each other.1
Venue choices
Intermediate
Some venues simply forbid it: crossing orders from the same user never fill.2
Firm duties
Advanced
US firms need procedures that catch and stop patterns of self-trading from any single algorithm or desk.3
Common mistakes
Not setting an ID
STP may not apply.
Wrong cancel side
Choose resting or incoming.
Thinking STP stops all wash trades
It blocks only matched IDs.
Ignoring venue rules
Each venue differs.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- STP blocks your orders from trading with each other.
- It prevents artificial volume.
- Venues cancel one side or both.
- Firms must watch for self-trades.
- Rules differ by venue and country.
Frequently asked questions
Is a self-trade illegal?
Do retail traders need STP?
Which side is cancelled?
Further learning
- Order Book
Where matches happen.
- Volume
Honest volume.
- Market Maker
Two-sided quoting.
- Exchange
Venue rules.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- CME Group. CME Globex Self-Match Prevention (opens in a new tab) Checked .
- Coinbase. Exchange Matching Engine (opens in a new tab) Checked .
- FINRA. Rule 5210. Publication of Transactions and Quotations (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.