Guaranteed Prices refer to a firm commitment by a liquidity provider or market maker to execute a trade at a specified price, irrespective of minor market fluctuations that occur between the quote request and trade execution. In crypto institutional trading, this offers certainty to large orders, particularly in over-the-counter (OTC) or request-for-quote (RFQ) environments for digital assets.
Mechanism
The mechanism involves the quoting system locking in a specific price for a defined period or volume, typically leveraging pre-funded liquidity pools or committed capital from the market maker. Technologically, this requires low-latency price feeds, robust risk management algorithms to hedge the market maker’s exposure, and atomic settlement capabilities, especially in crypto. The system architecture must ensure the quoted price remains valid until the trade is confirmed or the time limit expires.
Methodology
The strategic purpose of offering guaranteed prices is to attract institutional flow and facilitate large block trades by mitigating price slippage risk for clients. This methodology reduces execution uncertainty, which is particularly valuable in volatile crypto markets. It enables more predictable capital deployment and risk management for institutional investors, enhancing confidence in the liquidity provision infrastructure and supporting sophisticated trading strategies.
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