MPR, in the context of financial markets and trading systems, typically refers to a “Minimum Price Requirement” or “Market Price Reference.” It defines a threshold or benchmark price that an order must meet or exceed for execution, or against which a trade’s fairness is evaluated. This parameter helps ensure that trades are executed within acceptable price ranges, preventing aberrant pricing or protecting against significant market deviations, particularly in automated trading or RFQ systems.
Mechanism
The mechanism operates by integrating a predefined MPR value into the order validation or execution logic of a trading system. When an order is submitted or a quote is received, the system checks the proposed price against the MPR. If the price does not satisfy the minimum requirement, the order may be rejected, placed on hold for manual review, or adjusted to conform. This serves as a control point to maintain price integrity and prevent executions at unfavorable levels.
Methodology
Establishing and maintaining MPRs involves continuous monitoring of market conditions, liquidity, and volatility for relevant assets. For crypto assets, due to their inherent volatility, MPRs are often dynamic, adjusting based on real-time market data or a moving average of recent transaction prices. The methodology ensures adherence to risk policies and best execution obligations, particularly within institutional options trading and RFQ processes where competitive pricing and protection against stale quotes are paramount.
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