Private Quote Solicitation is the process where an institutional buyer or seller privately requests price quotations for a specific quantity of cryptocurrency or a derivative from a select group of liquidity providers. This method is common in Request for Quote (RFQ) systems for large orders to minimize market impact and discover optimal pricing without public exposure.
Mechanism
A buyer typically sends an electronic RFQ to pre-approved counterparties through a secure, dedicated communication channel or an institutional trading platform. These counterparties then respond with firm price quotes, which are visible only to the requesting party. The requester evaluates these quotes, selects the most favorable, and executes the trade directly with the chosen liquidity provider.
Methodology
The strategic advantage of private quote solicitation lies in its ability to facilitate large-volume transactions with minimal market disruption, thereby reducing slippage and protecting order flow from front-running. This methodology provides institutions with greater control over execution, allowing them to negotiate prices discreetly and access deep liquidity for significant crypto trades, including institutional options, outside of public order books.
Cryptographic protocols in permissioned DLT shield block trade RFQs, ensuring verifiable confidentiality and mitigating information leakage for superior execution.
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