Disclosed negotiation refers to a transaction or contract discussion where all relevant parties are fully aware of each other’s identities and direct involvement throughout the bargaining process. In crypto markets, this typically occurs in over-the-counter (OTC) trades, institutional options, or request for quote (RFQ) scenarios, contrasting with anonymous exchange trading. Its purpose is to facilitate tailored agreements and manage specific counterparty risks.
Mechanism
The operational mechanism involves direct communication channels, such as dedicated trading desks or secure digital platforms, enabling participants to exchange pricing, volume, and settlement terms. This process allows for customized bilateral agreements that may involve complex crypto derivatives or large block trades. Transparency regarding counterparty identity and deal specifics is a fundamental aspect, often supported by pre-agreed legal frameworks or smart contract stipulations that confirm participant roles.
Methodology
The strategic approach to disclosed negotiation prioritizes building counterparty relationships, achieving specific pricing or execution objectives for illiquid crypto assets, and mitigating information asymmetry. It involves assessing counterparty creditworthiness and reputational factors, particularly in markets lacking centralized clearing. The use of RFQ platforms provides a structured environment for multiple disclosed bids and offers, allowing institutional investors to secure optimal terms for significant positions without impacting public market prices.
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