A Phased RFQ, or Phased Request for Quote, is a structured procurement approach in institutional crypto trading that divides a larger order into sequential stages or tranches. This allows for iterative evaluation and execution, proving particularly beneficial for substantial or complex digital asset transactions.
Mechanism
Initially, a smaller portion of the total order or a preliminary information request is disseminated to multiple liquidity providers. Based on the competitiveness and quality of responses, a select group of dealers may be chosen for subsequent, larger tranches, or the entire order might be executed incrementally across several stages, adapting dynamically to prevailing market conditions.
Methodology
The strategic objective of a Phased RFQ is to minimize market impact, manage liquidity risk, and optimize execution price for large crypto block trades. By segmenting the order, it enables a systematic search for deeper liquidity without prematurely signaling the full trade size, thereby preventing adverse price movements and allowing for adaptive execution strategies.
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