Last Updated: February 4, 2026

PAX Exchange Trading Rules

General

PAX offers to its clients various markets for digital assets. For each market, PAX maintains a central limit order book ("CLOB"), a lambda book ("λ Book"), and utilizes a matching engine ("ME") to pair together orders (each such pairing, a "Trade") when the respective orders meet in price. The PAX matching engine utilizes price-time priority. The PAX λ Book is described herein.

Purpose of the Rules

These rules ("Rules") describe how trading occurs on the various PAX markets. The Rules describe how the PAX matching engine pairs orders together to form trades. The Rules describe the PAX λ book and priority between λ underlying orders launched by the same market event. The Rules state certain requirements for clients.

Access

Access to the platform is provided via the Application Programming Interfaces (APIs) and via the web interfaces (the "Web App"). The Web App is accessed through the main PAX Markets website and API documentation is available here: https://docs.pax.markets.

Terms of Service Precedence

The PAX terms-of-service take precedence in case of a discrepancy to these trading rules, if any.

Funding

Order Submission Requirements

Clients are required to have a funded account and available balance for the relevant asset to place an order. The balance is required to cover the size of the order, or the initial margin if applicable, and associated fees.

When an order is placed, PAX places a hold on the required balance amount or on the initial margin amount. Until the order is filled or canceled, that balance amount cannot be used to fund other new orders. When an order is filled or partially filled, the Client's account balance is adjusted using the amount filled and the hold for that amount is lifted.

Orders can be placed, modified, or canceled free of charge. Fees are charged only for orders affiliated with a Client's paid tier (λ) account. Fees, if any, are assessed according to the notional value of the amount of an order that is filled. Fees may be charged for margin loans, if applicable.

PAX may cancel an order at its discretion at any time for any reason, including but not limited to market manipulation, wallet risk screening results, or if required by applicable law.

Lambda Program (λ Program) Submission Requirements

λ programs can be placed, modified, or canceled free of charge. Fees, if any, are assessed according to the notional value of the amount of an order that is filled.

Every PAX λ program includes an underlying order with a maximum quantity that it may transact. The PAX Order Submission Requirements are evaluated using that underlying order as if it placed its maximum quantity at the time of λ program submission.

PAX continuously re-evaluates every in-force λ program according to the Order Submission Requirements using its underlying order and remaining quantity (the maximum quantity less any quantity placed already).

PAX may cancel a λ program at its discretion at any time for any reason, including but not limited to its underlying order and remaining quantity failing to meet the Order Submission Requirements or an update to any other risk-based data.

Order Book, λ Book, and Matching

The Order Book

Each digital asset market includes an Order Book (an "OB") that is an implementation of a continuous limit order book (a "CLOB"). The order book stores in-force limit orders and evaluates them against new limit orders. Marketable limit orders are paired with resting limit orders to form matches or trades ("Trades"). The OB is implemented by a Matching Engine (an "ME").

The λ Book

Each digital asset market includes a λ Book that stores and evaluates in-force λ programs.

Matching Principles at PAX

The following principles guide the trading rules.

Liquidity that is added to a price level is added at the back of the time-priority queue. Liquidity that is removed, whether by a trade, by canceling an order, or by sizing down an order, is removed from the front of the time-priority queue.

Orders from the λ book are matched by the price-time matching engine, but their input sequence to the matching engine is, in part, controlled according to the PAX equivalent basis priority ranking; for example, λs that cancel have a higher priority for sequencing into the matching engine than do λs that seek to take liquidity. When no further basis to decide a sequencing exists between λs, the λ Underlying Orders are split apart and interleaved in a random sequence, i.e. such that some amount of sharing is achieved and the allocation is randomly decided.

Details on these topics are provided in these rules, below.

Order Matching Priority

Each digital asset market is implemented with a continuous limit order book ("CLOB") implemented by a Matching Engine ("ME") that has a single order queue in which orders are matched according to price-time priority. Orders with the best price are matched first; if multiple orders share the same price, priority is given to the earliest order received.

Queue Priority for Modified and Canceled Orders

The PAX ME operates according to the principal that any order modification that sizes down an order (or cancels the order) applies to that Client's order which has the highest time based priority at a given price and any order modification that increases the size of an order creates a new order (for the difference in size) that is appended to the end of the time priority queue at a given price level.

Cancel-by-Price

Clients may use the PAX cancel-by-price API by naming an account-id, price, book side, and maximum quantity to cancel. The PAX ME, upon receipt of a price, book side, quantity to cancel, and account-id continuously cancels or sizes down that account's orders at that price according to their time priority until either all of that Client's orders at that price are fully canceled or until the exact amount of quantity requested is canceled potentially resulting in several canceled orders and the next lowest in time-priority order being sized down.

The PAX cancel algorithm can be thought of as a price-time matching process that selects an exact specified price level and searches for orders to cancel or size-down by account-id in time priority.

Cancel-by-Order-ID

Clients may use the PAX cancel-by-order-id API by naming an order UUID to cancel. Use of this API may incur extra processing overhead.

Before processing in the ME, PAX looks up the Order's original price, book side, and remaining unfilled quantity. A cancel-by-price message is then constructed and sent to the PAX ME. Because this lookup occurs before ME processing, the remaining unfilled quantity is not guaranteed to reflect actual state at execution time due to potentially queued but unrecorded fills.

Clients using the cancel-by-order-id API cannot expect the exact order they name in the API call to be canceled. Rather, up to that order's original quantity will be canceled from any of that Client's orders at that price and book side according to their time priority.

λ Book Market Events and Order Placement

The λ Book obtains input data (each such datum a "Market Event") from local and remote markets and from other 3rd party data sources. A local market is a digital asset market operated by PAX. A remote market is any 3rd party market for any asset. A 3rd party data source any other source of relevant market data not operated or created by PAX. Market Events from local markets or from remote or 3rd party sources are referred to as Local Market Events and Remote Market Events, respectively.

Local Market Events are generated by orders processed on various PAX Order Books by their respective Matching Engine. The order affiliated with an individual Local Market Event is referred to herein as the Seminal Order.

Upon receipt of a new Market Event, every λ program is evaluated according to its respective λ program predicate (the "Predicate"). If the Predicate is met, i.e. if the Market Event satisfies the Predicate criteria, the λ program's order (the "Underlying Order") is placed in full, or in part.

Cross-Market Predicates

A λ program predicate may reference Market Events from markets other than the market in which its Underlying Order will execute. The predicate market and the underlying order market are independent: a λ program's predicate may monitor one market (or multiple markets) while its Underlying Order targets a different market entirely.

For example, a λ program may:

• Place a BTC:USDT buy order when triggered by a price movement in the ETH:USDT market,
• Execute on PAX's SOL:USDT book when triggered by events observed on an external venue such as Binance or Coinbase,
• Monitor multiple assets and trigger when any of them meets specified conditions.

The Predicate evaluation occurs upon receipt of the relevant Market Event regardless of which market generated it. Latency characteristics may differ between Local Market Events (generated internally) and Remote Market Events (received from external sources).

Market Event Visibility

The λ Book evaluates every Market Event upon receipt. Local Market Events are not shown to the λ Book until after the Seminal Order (that caused the Market Event) has been processed by the Matching Engine.

Note that a Local Market Event includes data enrichment such as the new top-of-book, the deepest price level affected, etc., see information on the PAX Unified Market Data Format. In other words, Local Market Event information cannot be generated without modifying the CLOB state according to the Seminal Order.

Remote Market Events are shown to the λ Book immediately upon receipt from their source.

Matching Engine Input Priority

The ME has two limit order input queues: the Direct Placement queue which handles orders transmitted over the limit order API, and the Indirect Placement queue which handles orders sent from the λ Book. In case an order is available from both queues simultaneously, the order placed from the λ Book has priority.

λ Program Structure

Each λ program is comprised of a Predicate, an Underlying Order, and program parameters. According to program parameters, the Underlying Order may be placed in full or partially (and if in part, then the remaining unplaced portion of the order remains with the λ program which remains in force). When a λ program Underlying Order is placed in its entirety, the λ program is exhausted and therefore canceled.

Using a λ Program to Cancel or Size Down Resting Orders

A PAX λ program Underlying Order may indicate a negative quantity. Such an Underlying Order is interpreted by the PAX ME as a cancelation request; see above description of Cancel-by-Price for details.

An Underlying Order may effectively be a cancelation request. Such an order may be referred to as an "order that cancels liquidity."

λ Program Visibility

PAX Clients using the λ API have the option to display their λ program in publicly visible market data. λ programs default to non-displayed.

Orders Placed on an Equivalent Basis

A single Market Event may satisfy the predicates of multiple λ programs. Multiple orders placed by the same Market Event are referred to as "Orders Placed on an Equivalent Basis."

Sequencing Orders Placed on an Equivalent Basis

In such a case, the PAX λ Book sequentially places all such orders according to the following priorities. Orders are evaluated against the highest applicable tier first; orders sharing the same tier are then sequenced according to lower tiers.

Priority tiers for Orders Placed on an Equivalent Basis

1. Displayed: orders placed as the result of a displayed λ program are placed first.
2. Orders that cancel liquidity (i.e. orders with negative quantity), are placed next.
3. All remaining orders are split and interleaved.

For example, if there are two orders placed on an equivalent basis, both of which resulted from the Underlying Order of a displayed λ program and both of which are orders that cancel liquidity, then those two orders will be split and interleaved; possibly interleaved multiple times if their quantities are sufficiently greater than the Split Quantity.

The lowest priority tier is Split and Interleave. If multiple orders remain to be placed according to this tier, they are placed into a random sequence and then partially placed, according to a pre-determined Split Quantity. After a part of an order has been placed, its remaining quantity to be placed is deducted by the amount of the Split Quantity and it is moved to the back of the placement queue: the next order in random sequence will be placed, in part, until all such orders are fully placed.

If the ME determines that an order can no longer be filled for any quantity (e.g., available liquidity is exhausted), that order is not re-enqueued to the Split and Interleave queue, rather it is dropped. If the dropped order represented the full Underlying Order of its λ program, that λ program is canceled.

The Split Quantity

The Split Quantity is determined solely at the discretion of PAX and is dynamically updated. Its value will reflect an economically significant fraction of the typical quantity at the touch on the respective Order Book.

Settlement, Accounts, and Wallets

Trade Settlement & Confirmation

When the ME identifies a matched pair of orders, a Trade is said to be executed. When a trade is executed, both participants in the trade will have their account balances updated and any assets that were held by their respective open orders will be released according to the quantity filled by the trade.

All executed trades are final and binding.

FBO Accounts, FBO Wallets

PAX Clients may have a fiat bank account titled in their name and interest, known as their Client FBO Bank Account. PAX Clients may have one or several on-chain wallet addresses on various cryptocurrency blockchains, each titled in their name and interest and each known as a Client FBO Wallet. Such title extends only to the funds and digital assets ledgered to the Client, i.e. for any assets (fiat or digital) sold by the client that remain (for any length of time) in an FBO Bank Account or FBO Wallet are subject to a funds sweep by PAX, wherein said funds sweep may move the assets to a PAX omnibus bank account or wallet or to another Client FBO Bank Account or another Client FBO Wallet, as appropriate.

Trade Settlement

A trade is considered settled when recorded in the PAX ledger. The Client's balance on the PAX Ledger is referred to as the Client's Ledgered Balance. The Ledgered Balance may differ from the Client's on-chain wallet balance or FBO bank account balance until a funds sweep aligns them.

Funds Settlement

PAX may transfer assets—either on-chain for digital assets or between bank accounts for fiat—to align a client's FBO Bank Account balance or FBO Wallet balance with their Ledgered Balance. These transfers occur upon client withdrawal requests or periodically at PAX's discretion.

Continuous Funds Settlement

In certain cases, PAX may run continuous funds sweeps to align FBO Bank Account and FBO Wallet Balances with the Client's ledgered balance. Clients cannot select this option, rather, at its sole discretion, PAX will elect certain Clients into Continuous Funds Settlement. The periodicity of a continuous funds sweep may be practically gated by the underlying account technology. Certain digital assets that may have faster on-chain block settlement times may have their periodic funds sweep timing aligned to a slower block chain to support batched processing. Clients cannot reasonably expect, if they are for any reason elected into Continuous Settlement, that their FBO Bank Account balance or their FBO Wallet balance is updated instantaneously after a trade, rather, a funds sweep update may take > 24 hours for fiat currency and > 20 minutes for digital assets.

Deferred Funds Settlement

In certain cases, PAX may defer Funds Settlement and seek to minimize the movement of tokens on-chain by maintaining actual client balances on its ledger rather. Clients cannot select this option, rather, at its sole discretion, PAX will elect certain Clients into Deferred Funds Settlement.

Withdrawal of Funds

Clients can withdraw fiat or digital assets according to their Ledgered Balance, subject to any withdrawal limits.

Account Types

PAX offers two account types: free tier and paid tier. The free tier cannot use the λ API; the paid tier is enabled to use the λ API. Each account is given a unique account-id; thus an individual paid tier account will have a different account-id from an individual free tier account.

Orders that cancel liquidity must match in account-id to affect a cancelation or size-down of a Client's orders; i.e. a Client cannot use a paid tier account to place λ programs that cancel or size down resting orders placed from their free tier account.

Asset Custody

Both fiat currency and digital assets are held by a 3rd party qualified custodian: Anchorage Digital N.A. Assets held in custody are subject to the legal and regulatory requirements of both PAX and the 3rd party custodian.

Fees and Rebates

Trading Fees and Rebates

PAX has a unique fee and rebate structure. For avoidance of doubt, see the PAX Terms of Service.

Orders that are placed using a paid tier account-id are charged a fee according to the paid tier fee schedule.

Orders that are placed using a free tier account-id are not charged a fee ^[1], and may receive a rebate according to the free tier rebate schedule. Rebates are paid only if a free tier order is matched with a paid tier order and the paid tier order paid a sufficient fee to fund the rebate. Paid tier accounts may be awarded incentive based pricing based on PAX liquidity incentive programs.

Fee and Rebate Settlement

Fees (if any) and rebates (if any) are applied immediately upon recordation of a trade to the PAX ledger.

Order Types & Requirements

Order Types

PAX supports limit orders only. Limit orders may name a marketable price. PAX limit orders may name a negative quantity in which case they indicate cancelation of up that much quantity at that specific price on the indicated book side.

Time-in-Force

PAX supports the following order time-in-force parameters:

1. GTC: good until canceled.
2. IOC: immediate or cancel.

Order Minimums

Orders that form a new price level must clear the PAX minimum level quantity for that asset. In certain cases, if a Client sizes-down an order, the entire order may be canceled if the price level quantity falls below the minimum.

Market Access Controls

PAX may reject certain orders if the price or quantity is outside of certain bands. Clients may, at their sole discretion, flag their order as "no market access control" in which case such an order may trade through multiple price levels and have significant price impact on the Order Book.

Risk Checks and λ Risk Checks

Clients are required to have sufficient balance (either in full or for the initial margin, if applicable) to place an order or to place a λ program. See Order Submission Requirements.

Market Integrity & API Availability

Exchange Availability & Interruptions

PAX may, at its sole discretion, suspend trading to maintain market integrity on the exchange including, but not limited to, any of the following circumstances or in response to:

• System disruptions,
• Disorderly market conditions,
• Network issues, hosting issues, cloud computing issues, database errors or software errors,
• Adverse market events,
• On-chain events such as chain splits, soft forks, or hard forks,
• Excessive volatility or excessive price moves when it deems that not suspending trading would likely cause significant damage to the interests of clients or the orderly functioning of the exchange.

API Usage

PAX API access may be subject to rate limits.

Market Integrity & Abuse

Clients are prohibited from engaging in any activity that amounts to market abuse or manipulation on the exchange; examples include wash trading, layering and spoofing. Further defined as activity that:

• Gives, or is likely to give, false or misleading signals as to the supply of, demand for, or price of, a digital asset,
• Secures, or is likely to secure, the price of one or several digital assets at an abnormal or artificial level.

Prohibition of Insider Trading

The use of inside information to trade on the platform is prohibited.