These exchanges provide real-time, reliable and public market data regarding their trading activity. Accordingly, by blending the prices from a diverse set of widely utilized exchanges and subjecting their data to the Index's proprietary filtering methodology, the Index provides a reference that is indicative of the fair value of the spot price.
The TeraBit Index employs strict and objective criteria. In order to consider an exchange for inclusion in the Index, an exchange must at a minimum:
|1||Serve an international customer base|
|2||Provide an API with live prices|
|3||Provide a bid-offer spread for an immediate sale and an immediate purchase|
|4||Have a minimum trade size that is less than $1,000 USD|
|5||Have daily and monthly trading volume that meets minimum acceptable levels as determined by TeraExchange|
|6||Permit withdrawals and deposits of fiat currency as well the transfer of bitcoin within a commercially reasonable period of time|
|7||Meet regulatory, operational and technological criteria established by TeraExchange|
|8||Charge reasonable transaction fees (exchanges that charge zero fees are excluded)|
|9||Execute and maintain an Information Sharing Agreement with TeraExchange|
Information Sharing Agreement (ISA) is a critical component of this qualification criteria as it ensures that TeraExchange and the CFTC receives the transparency to routinely monitor and assess the underlying marketplace. These agreements, which foster a collaborative relationship with TeraExchange and its underlying bitcoin exchanges, enhance the safety and soundness that TeraExchange demands for its trading facility.
Once an exchange qualifies as a constituent, the TeraBit Index employs a robust set of quantitative criteria that guides the influence each exchange's market data has over the Index.
Components of the Index include:
Volume Weight Coefficient: The TeraBit Index uses a rolling average to calculate the weight coefficient assigned to each individual exchange. Although higher volume exchanges carry greater weight within the calculation, the weight coefficient that is employed limits the concentration of any one qualified marketplace.
Data Set Filtering: Price data from each exchange is considered and evaluated, with anomalous data having no influence over the Index. The overall objective of this filtering process is to neutralize deviant pricing behavior and dampen the impact of individual exchange transient events.
Intra-Day Filter: The Index enforces its proprietary filtering criteria intra-day and will exclude data from those exchanges that no longer qualify.