Dealer-Intermediated Systems are market structures where financial transactions are conducted between participants and a central group of dealers, rather than directly between participants. In crypto markets, this refers to platforms or protocols where professional market makers act as intermediaries, providing liquidity and pricing services, particularly in institutional RFQ and options trading.
Mechanism
Clients submit requests for quotes to multiple dealers, who then provide bilateral prices. The client chooses the most favorable quote, and the transaction occurs directly with that dealer. These systems often feature proprietary trading technology, risk management frameworks, and established credit lines between dealers and their institutional clients, facilitating controlled execution.
Methodology
The strategic approach relies on the capital commitment and market expertise of dealers to facilitate trading, especially for illiquid or complex instruments. It offers benefits like price certainty, anonymity for large orders, and access to deep liquidity, albeit with a spread cost. In crypto, these systems aim to bridge traditional financial workflows with digital asset markets, addressing institutional needs for price discovery and execution.
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