> For the complete documentation index, see [llms.txt](https://help.rails.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://help.rails.xyz/about-rails/rails-exchange.md).

# Rails Exchange

Relaunching soon!

Rails Exchange gives eligible traders in supported jurisdictions access to perpetuals and options trading at [trade.rails.xyz](https://trade.rails.xyz). Traders signup directly with Rails and orders execute through our proprietary matching engine. Its hybrid architecture combines fast, off-chain order matching with secure, transparent on-chain custody.

## Regulatory Compliance

Rails Exchange is operated by Rails Limited, and is registered with the Cayman Islands Monetary Authority (“CIMA”) as a Virtual Asset Service Provider ("VASP") under registration #2092731 and holds a Securities Investment Business Act license ("SIBA") under license #2224748.

Our complete AML Compliance Program has been tested at scale. Every user is verified through strict identity verification (Know Your Customer (KYC) and Know Your Business (KYB)) checks, transaction monitoring, name and wallet screening checks. Rails partners with external agencies and regulators to conduct regular audits of its program, ensuring institutional readiness.

{% hint style="success" %}
Read more about our Compliance program [here](https://rails.xyz/compliance).
{% endhint %}

## Architecture

Rails Exchange is a hybrid platform that optimizes the best of decentralized and centralized exchanges, resulting in institutional-grade execution. 

The same high-performance back end that fuels [Rails Infrastructure](/about-rails/rails-infrastructure.md) is in place. Our centralized order execution and matching engine matches orders with P95 latency under 100 µs. Read our [API Docs](https://docs.rails.xyz/) to learn more.

Custody remains on-chain in audited smart contracts, so your funds are always in your control. Learn more in the next section.

## Custody

For accounts on Rails Exchange, funds are held in an **on-chain, audited smart contract on Stellar.** This means your assets stay under your control and never in Rails' custody. **Only you** can authorize withdrawals.

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Read our smart contract audit **here**. 
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This model provides full on-chain visibility and integrates directly with the Rails trading system.

* User funds are secured in an audited smart contract.
* On-chain deposit events credit user accounts in real time.
* Withdrawal requests are routed to the smart contract based on verified balances.
* Trading activity is consolidated off-chain, then validated and recorded on-chain every 30 seconds. Viewable in our [Block Explorer](/manage-account/block-explorer.md).

<details>

<summary>What on-chain custody means for traders</summary>

Because your funds sit in the smart contract rather than in a private company ledger, the rules that govern deposits, withdrawals, and balances are enforced by code that anyone can inspect. **Rails cannot move your funds outside of the conditions defined in that contract, and every change to your balance is anchored on-chain.**

{% hint style="success" %}
Learn how to [connect a wallet](/manage-account/manage-funds/wallet-connection.md), or about how to [fund your account](/manage-account/manage-funds.md).
{% endhint %}

Trades are matched off-chain for speed, but the resulting balances are validated and recorded on-chain roughly every 30 seconds. This means you never have to take Rails' word for your position: you can independently verify every deposit, withdrawal, fee, and settlement yourself.

Use our [Block Explorer](/manage-account/block-explorer.md) to independently validate any transaction against its on-chain record.

</details>

## Collateral

All collateral accounts must be [deposited](/manage-account/manage-funds/deposit.md) to Rails Exchange in **USDT** on a supported blockchain.

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We choose to leverage [Tether's](https://tether.to/en/) USDT token, as USDT is the most widely accepted stablecoin in the world and has a [cross-chain transfer service](https://usdt0.to/transfer) which makes it easy, fast and low cost to bridge other USDT tokens to other supported networks. Additionally, leveraging a single token enables clearer and more transparent tracking and auditing of funds.
{% endcolumn %}

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<figure><img src="https://1893902947-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FvoJ4s2ha99AB453yyXn5%2Fuploads%2F89wVOXa8Q7oOwIO7AbBG%2Fimage.png?alt=media&amp;token=5ba5de94-527b-455b-a615-2f2e8e6b4e03" alt="" width="128"><figcaption></figcaption></figure>
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{% endcolumns %}

{% hint style="success" %}
Learn more about USDT & USDT0 on [Tether's website](https://usdt0.to/assets/usdt0).
{% endhint %}