Execution Structure refers to the defined architecture and operational framework governing how trading orders are processed and completed in financial markets, including those for cryptocurrencies. It specifies the rules, systems, and protocols that determine how trades are matched, settled, and recorded.
Mechanism
In crypto trading, execution structures range from centralized exchanges with order books to decentralized exchanges using automated market makers, or over-the-counter desks for Request for Quote transactions. This mechanism involves order routing, matching engines, liquidity aggregation, and cryptographic settlement on a blockchain. Key components include pre-trade risk checks, order management systems, and post-trade reporting.
Methodology
The design of an execution structure directly influences trade efficiency, liquidity access, price discovery, and risk management. Institutional players select or customize execution structures to optimize for factors such as minimal slippage, best available price, speed, and privacy, particularly in smart trading or large block trades within the fragmented crypto market.
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