Last Updated: September 24, 2026

PAX 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 that meet in price, forming Trades. 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 Underlying Orders launched by the same Market Event. The Rules state certain requirements for Clients. Every Order is handled under these Rules however it is entered: directly, through the limit order API or the Web App, or as the Underlying Order of a λ Program.

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 over these Rules if the two conflict.

Definitions

Capitalized terms used but not defined in these Rules, such as Account, Client, Digital Asset, Order, Platform, Provider Documents, Regulated Services, Regulated Services Provider, Settlement, Trade, and Trading Account, have the meanings given in the Terms of Service. In these Rules:

"Fee Schedule" means the schedule of PAX's fees and rebates published at https://docs.pax.markets/trading/fee-structure/, as updated from time to time; it is the Fee Schedule that Section 3(h) of the Terms of Service refers to.

"Free Tier Account" means a Trading Account of the Free Tier type described in the Terms of Service; a Paid Tier Account is defined there.

"λ API" means the PAX API through which a Client with a Paid Tier Account submits, modifies, and cancels λ Programs.

"λ Book" means, for each market, the component of the Platform that holds in-force λ Programs and evaluates them against Market Events.

"λ Program" means a program submitted through the λ API that places, modifies, or cancels an Underlying Order when its Predicate is met. A λ Program is not itself an Order.

"Market Event" means a datum the λ Book receives: a "Local Market Event," generated by an Order processed on a PAX Order Book, or a "Remote Market Event," received from a remote market or another third-party data source.

"Matching Engine" or "ME" means the component that implements each Order Book and pairs Orders that meet in price.

"Order Book" means, for each market, the continuous limit order book ("CLOB") that holds in-force limit orders.

"Orders Placed on an Equivalent Basis" means Orders placed by the same Market Event.

"Predicate" means the condition in a λ Program that, when a Market Event satisfies it, causes its Underlying Order to be placed.

"Seminal Order" means the Order whose processing generated a Local Market Event.

"Split Quantity" means the quantity, set by PAX, in which Orders Placed on an Equivalent Basis are placed in turn at the lowest priority tier.

"Underlying Order" means the Order a λ Program places.

"Web App" means the PAX web interface to the Platform.

Funding

Order Submission Requirements

Clients are required to have a funded Trading 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 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, if any, are as set out in the Fee Schedule. 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 as set out in the Fee Schedule.

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 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 these 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, λ Programs that cancel have a higher priority for sequencing into the Matching Engine than do λ Programs that seek to take liquidity. When no further basis to decide a sequencing exists between λ Programs, their 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.

Two contra-side Orders meet in price when the price of one meets or exceeds the limit price of the other, regardless of which Order was resting and which arriving, who placed either Order, or whether either was displayed. An Order may trade against one or more contra-side Orders and so be filled in parts.

Queue Priority for Modified and Canceled Orders

The PAX ME operates according to the principle 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.

Counterparties

The Platform provides no means to select, direct, or pre-arrange a counterparty, and under price-time priority it cannot be known in advance which Orders an Order will trade against. Liquidity on an Order Book may include liquidity that a PAX affiliate supplies to the Regulated Services Provider for its own account or as market maker (see Section 12(l) of the Terms of Service). Such liquidity has no priority, privilege, or access relative to Client Orders, and every Order is subject to these Rules, including the prohibitions on trading on non-public information.

No Best-Execution Undertaking

Digital Assets may trade at different prices on other venues, and other venues may offer better prices or lower costs. PAX makes no representation that the Platform provides the best available price or execution. There is no assurance of liquidity or market depth in any market, or that an Order will trade at any particular time or price.

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's 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. Every λ Program sees a Market Event at the same time, whichever Client entered it. 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

A λ Program is submitted through the λ API and places, modifies, or cancels Underlying Orders as these Rules describe. A λ Program is not itself an Order; each Underlying Order it places is.

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.

Market Data

Displayed Orders and Published Trades

Limit orders may, with the appropriate time-in-force, rest on an Order Book and, with the appropriate display attribute, be shown on the Order Book and published in PAX market data feeds. Every Trade is published in PAX market data, whether or not the Orders that formed it were displayed, and client-identifying information may be redacted from it. A Trade is public market data from the moment it is shown to the λ Book, and information that has become public market data is no longer confidential.

Remote and Third-Party Data

λ Programs may take as input PAX market data and Remote Market Events, and Clients may act on either. Both are consumed as is. PAX does not originate, review, or control third-party data, makes no warranty as to its accuracy, completeness, timeliness, or continued availability, and has no responsibility for it; claims about third-party data lie against the third party, not PAX.

Settlement, Accounts, and Balances

Trades

A Trade occurs when the ME pairs two Orders that meet in price. Both Clients' balances are updated at once, and any balance held for an open Order is released to the extent of the fill. All Trades are final and binding. Trading is off-chain and not broadcast to any public blockchain.

Settlement

When a Trade occurs, PAX transmits the Clients' settlement instructions to the Regulated Services Provider, which settles by book entry on its own books. Settlement may be netted across Trades and deferred in time, and need not occur Trade-by-Trade.

Balances

A Client's Trading Account shows a balance for each fiat currency and Digital Asset held net of what the Client has deposited, bought, sold, and withdrawn, and of fees and rebates. Fiat and Digital Assets are held by the Regulated Services Provider, directly or through its banking partners, in the Client's account with it under the Provider Documents; they are not assets of PAX, and the Regulated Services Provider maintains the authoritative record of Client balances.

Deposits and Withdrawals

The Regulated Services Provider carries out deposits and withdrawals under the Provider Documents, between the Client's account with it and the Client's Financial Accounts and External Wallets, 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 Trading 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. Free Tier and Paid Tier Accounts may be held to different speed standards, which PAX may change from time to time, with or without notice.

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.

Fungibility

All forms of the same Digital Asset may be treated as fungible and equivalent, including forms held across multiple blockchain protocols and wrapped forms.

Order Types & Requirements

Order Types

PAX supports limit orders only. Clients may place limit orders directly, through the limit order API or the Web App, or indirectly, as the Underlying Order of a λ Program. 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, and 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.

PAX may hold back, or decline to place, an Order or λ Program on the basis of its risk checks, which may include financial or collateral checks and KYC, KYB, or AML checks, and may require additional confirmation or authentication for certain Orders or account activity.

Order Accuracy

Clients are solely responsible for the accuracy and intent of every Order they place, and for monitoring the status of their Orders and Trades.

Market Integrity & API Availability

Availability & Interruptions

PAX may, at its sole discretion, suspend trading on any or all markets at any time, whether for maintenance, upgrades, to maintain market integrity, or for any other reason, 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 market.

When trading is suspended, PAX may cancel any or all open Orders and λ Programs, on any or all markets, without notice. Clients are responsible for re-entering any Orders or λ Programs they wish to keep in force when trading resumes.

API Usage

API usage includes the limit order API and the λ API, and access to either may be subject to rate limits.

Market Integrity & Abuse

Clients are prohibited from engaging in any activity that amounts to market abuse or manipulation, including:

• fictitious transactions, wash trades, pre-arranged trades, money passes, accommodation trading, front-running, layering, and spoofing;
• placing Orders with the intent to cancel them before execution, or to mislead other market participants;
• price manipulation, intimidation, or coordination, or any other deceptive or manipulative act or practice;
• coordinating prices, Orders, or Trades with any other market participant or person, or disclosing Orders to any third party except as required by law;
• placing simultaneous buy and sell Orders that could execute against each other, or using any self-match prevention tool in a manner that misleads the market;
• placing Orders or engaging in activity to generate unnecessary volatility, create artificial prices, or otherwise disrupt the fair and orderly operation of the Platform.

Market abuse includes any 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.

Wash Trading

Wash trading is trading with oneself, or colluding to trade among parties under the same beneficial control, with no intent to exchange economic value. It can create the appearance of trading activity where there is none, and it may be a form of market manipulation. It is prohibited.

Front-Running and Order Information

Front-running is trading on non-public knowledge of a pending Order: its existence, side, size, price, or any other detail. It is prohibited. PAX uses Clients' trading instructions and non-public market data only to operate the Platform, and discloses them to no trading participant or affiliate while they remain non-public. They are visible to no trading participant, whether a Client or a PAX affiliate, so none can front-run.

Prohibition of Insider Trading

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

Fees and Rebates

PAX's fees and rebates are set out in the Fee Schedule. They are PAX's technology and platform fees. Fees for the Regulated Services, if any, are charged by the Regulated Services Provider under the Provider Documents (see Appendix 1 of the Terms of Service) and are separate from PAX's fees. PAX may pass through to Client, at cost, third-party charges incurred on Client's account in connection with the Regulated Services, such as returned wire or ACH fees.

PAX may modify the fees at its discretion at any time with prior notice to Client, and Client is solely responsible for knowing the applicable fees prior to use of the Platform. The fees set forth in the Fee Schedule are maximums. PAX may charge less than a scheduled fee, or waive it, for any Client, market, or period, with or without notice; any increase above a scheduled fee is an amendment subject to Section 2(l) of the Terms of Service.

Order Characterization and Basis for Fees

Taking Orders. An Order that is marketable upon receipt by PAX is characterized as "taking."

Making Orders. An Order that is non-marketable upon receipt by PAX and that is not immediately canceled is characterized as "making."

An Order's characterization depends on neither its type nor how it was entered, whether through the limit order API, by a λ Program, or otherwise.

Basis for fees. For each executed (filled or partially filled) Order, the fee is a fraction of the notional value of the filled amount, denominated in the quote fiat currency or the quote token.

Paid Tier

The Paid Tier Trading Account and its fees relate to Services provided by PAX. Orders placed through a Paid Tier Account pay the Paid Tier fees in the Fee Schedule, however they are entered. Paid Tier Accounts may be awarded incentive-based pricing under PAX liquidity incentive programs.

Fee payment currencies and tokens. The fee is paid in the quote fiat currency or the quote token, so long as the quote token is a named PAX fee token. Where the quote token is not a named PAX fee token, the fee is computed in the quote token, converted to USDC at prevailing market prices, and deducted from Client's USDC balance.

Canceled Orders. No fees are charged for Orders canceled in their entirety, or for the unfilled amount of an Order that is partially filled before cancellation.

Chain transaction fees. On-chain transaction fees (e.g., gas fees) are paid by Client and are required to move Digital Assets on-chain. Different blockchains (e.g., Bitcoin or Ethereum) have different on-chain fee requirements. Trading at PAX is conducted off-chain, and PAX may seek to minimize on-chain movements of tokens. The Regulated Services Provider may move Digital Assets on-chain to settle Trades, to facilitate Client withdrawals, or for other reasons. Whatever the reason for the movement, the amount moved is net of on-chain transaction fees, or the fee may be deducted from the Client's balance.

Chain transaction fee waiver programs. PAX may offer incentive programs under which PAX or a PAX affiliate pays the chain transaction fees. PAX may implement, revoke, or modify any such program at any time, with or without notice.

Free Tier

The Free Tier Trading Account relates to Services provided by PAX. Orders placed through a Free Tier Account pay the Free Tier fees, if any, and may receive the rebates set out in the Fee Schedule. A Free Tier Account cannot use the λ API, and its Orders cannot be modified or canceled by a λ Program.

A rebate is paid only when a Free Tier Order trades with a Paid Tier Order, and it is funded by, and cannot exceed, the fee that Paid Tier Order pays. Rebates are paid at the sole discretion of PAX. When the counterparty Order pays no fee or a reduced fee, whether because it is exempt, belongs to a PAX liquidity or market-making program, or was placed by PAX or a PAX affiliate, the rebate may be reduced or not paid at all.

Fees and rebates are assessed on each fill. For example, if a Free Tier Order for 100 is filled 25 by Free Tier Orders and 75 by Paid Tier Orders, a rebate (if any) is paid only on the 75, calculated on the fill quantity and the quote currency or quote token of each Paid Tier fill.