A Fixed Quote Horizon defines a predetermined, static timeframe during which a disseminated price quote for a digital asset remains valid and actionable at its specified price and size. This fixed duration provides explicit price certainty to the quote recipient.
Mechanism
When a liquidity provider issues a quote with a fixed horizon, a precise timer is initiated. Throughout this duration, the quote remains active and cannot be unilaterally withdrawn or altered by the provider, ensuring the counterparty can execute the trade under the locked-in terms. The quote automatically expires and becomes invalid once the horizon is reached.
Methodology
This operational parameter balances the need for client confidence in quoted prices with the liquidity provider’s requirements for risk management. A shorter horizon limits adverse selection risk for the provider in volatile markets, while a longer one offers greater flexibility to the client. The selection of the horizon is a strategic decision, impacting liquidity provision and market stability.
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