A Multi-Dealer Network is a structured system that connects institutional clients with a diverse group of market makers or liquidity providers to facilitate competitive pricing and execution of trades. In crypto, this network is central to institutional Request for Quote (RFQ) platforms, allowing participants to solicit bids from several dealers simultaneously. Its purpose is to enhance price discovery and market efficiency.
Mechanism
The network operates as an aggregation layer, collecting real-time price quotes and liquidity information from multiple integrated dealers. When a client submits an RFQ, the system broadcasts it to selected dealers, gathers their responses, and presents the best available prices. This architecture supports transparent comparison and rapid execution, often integrating with automated trading systems.
Methodology
The methodology emphasizes fostering competition among liquidity providers, thereby improving pricing and increasing execution certainty for large-block trades. By diversifying counterparty risk and broadening access to liquidity, this system helps institutional investors manage market impact and achieve more favorable transaction costs. It is a critical component for scalable and robust institutional crypto trading infrastructure.
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