Competitive Execution in crypto trading signifies the process of obtaining the most advantageous terms for a transaction by soliciting simultaneous price commitments from multiple liquidity providers. This method aims to secure superior pricing and fill rates.
Mechanism
This typically operates through a Request for Quote (RFQ) system where an institutional participant broadcasts an order inquiry to a pre-selected group of market makers. These entities then respond with their firm bids and offers, allowing the initiator to select the most favorable quote for immediate transaction.
Methodology
The primary objective of this methodology is to reduce execution costs and mitigate slippage for larger trade sizes. By fostering competition among various liquidity sources, the approach ensures that the realized transaction price closely aligns with the prevailing fair market value at the time of trade.
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