How profitable are exchanges?

[Eastwind]

Exchanges can create money and bitcoin out of thin air in their database and no one will notice it, but they are just as risky as any other small bank, which also does the same thing

That is too dangerous for them if they are on the wrong side.

[Borisz]

Fees make big money, 0.2% per trade is a huge amount of BTC at the end of the day.
Also withdrawal fees are sometimes high, especially for many small transactions.
All depends on the volume of trades.

[leannemckim46]

Exchanges can create money and bitcoin out of thin air in their database and no one will notice it, but they are just as risky as any other small bank, which also does the same thing

That is too dangerous for them if they are on the wrong side.

History shows that exchanges will eventually be on the wrong side of these kinds of trades/shanagians. They may be able to profit somewhat over short periods of time, but it will only take one major market swing in which they are on the wrong side of for them to end up with major losses in excess of what they would be able to make back. I would say that this kind of activity would almost certainly have a negative EV.

[pawel7777]

I know it's an old thread. But if anyone is still interested, Bitstamp have filed their first accounts recently, more in this thread:

https://bitcointalk.org/index.php?topic=785256.0

[JorgeStolfi]

I know it's an old thread. But if anyone is still interested, Bitstamp have filed their first accounts recently, more in this thread:
https://bitcointalk.org/index.php?topic=785256.0

That is an abbreviated account of their financial state *as of Oct/2013*, which they were required to file under UK law (and they filed only in Aug/2014, maybe late).

It does not say how much profit they made.  It says only that they have about 64.9 M USD that belong to clients and about 820 k USD of their own.  Apparently it does not include their bitcoin holdings, since their assets (65.7 M USD) are described as "cash in the bank".