Negotiated Execution describes a trading method where the price and quantity of a cryptocurrency asset are directly agreed upon between two parties, typically an institutional client and a liquidity provider. This transaction occurs bilaterally, outside the public order book of an exchange.
Mechanism
The process typically commences with a client submitting a Request for Quote (RFQ) to one or more chosen liquidity providers. Following an electronic or verbal exchange, a specific price and trade size are confirmed. This leads to a direct transaction, with settlement occurring between the two engaged entities.
Methodology
This approach focuses on securing optimal pricing and execution for large or less liquid cryptocurrency trades by leveraging direct relationships and communication with market makers. Negotiated execution provides discretion, minimizes market impact, and allows for bespoke terms that are often unavailable through standard exchange order books.
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