Minimum Quote Requirements are specific rules or predefined standards that mandate market makers or liquidity providers to maintain active bid and ask orders for a particular digital asset. These requirements specify minimum quantities and maximum permissible bid-ask spreads, designed to ensure sufficient market depth and orderly price discovery.
Mechanism
These requirements dictate the continuous presence of two-sided quotes, typically within a certain percentage deviation from the current mid-market price, and for a defined volume of the asset. Non-compliance can lead to penalties, loss of market maker status, or revocation of associated incentives and access privileges.
Methodology
Compliance is achieved through automated quoting systems that constantly monitor market data and adjust order placements to satisfy the stipulated volume and spread constraints. These systems must dynamically account for real-time volatility, liquidity shifts, and exchange-specific operational rules to maintain consistent quoting, thereby facilitating price discovery and enabling efficient trading.
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