Continuous Quoting Obligations (CQOs) require market makers to consistently provide bid and ask prices for specific crypto assets or derivatives throughout designated trading periods. Their purpose is to maintain market liquidity, reduce bid-ask spreads, and facilitate efficient price discovery, especially in institutional RFQ and options markets.
Mechanism
This mechanism demands market-making algorithms operate with high availability, continuously adjusting quotes based on current market data, internal inventory status, and calculated risk parameters. It necessitates low-latency pricing infrastructure and tight integration with order management systems.
Methodology
Firms meeting CQOs employ advanced quantitative models and automated trading systems that react instantly to market movements, ensuring an active two-sided market presence. This strategy is critical for providing the depth and stability institutional participants require, thereby contributing to market robustness.
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