Maker Rebates

Maker rebates are financial incentives paid by an exchange to traders who add liquidity to the order book. When a market maker places a limit order that rests on the book, they are creating the potential for a trade, rather than executing against an existing order.

If another participant trades against this resting order, the market maker is credited with a portion of the transaction fee collected from the taker. This mechanism is designed to encourage competitive pricing and deep markets.

It is a critical component of high-frequency trading strategies where margins are thin and rely on capturing the spread while collecting rebates.