RFQ Spread Trading describes the practice of executing a trading strategy involving the simultaneous purchase and sale of two or more related crypto assets or derivatives, where the Request for Quote (RFQ) mechanism is utilized to solicit prices for the entire spread as a single executable transaction.
Mechanism
Instead of obtaining individual bids and offers for each component of a spread, a trader submits an RFQ for the combined instrument, such as buying spot Bitcoin and selling a Bitcoin future. Liquidity providers respond with a single net price for the spread, ensuring simultaneous execution of all legs, which minimizes slippage and directional leg risk.
Methodology
Institutional crypto trading desks employ RFQ spread trading to capitalize on price discrepancies between related instruments, hedge existing positions, or implement complex market views with enhanced execution efficiency. This method reduces operational complexity and counterparty risk compared to leg-by-leg execution, particularly in options strategies or basis trades within the crypto derivatives market.
We use cookies to personalize content and marketing, and to analyze our traffic. This helps us maintain the quality of our free resources. manage your preferences below.
Detailed Cookie Preferences
This helps support our free resources through personalized marketing efforts and promotions.
Analytics cookies help us understand how visitors interact with our website, improving user experience and website performance.
Personalization cookies enable us to customize the content and features of our site based on your interactions, offering a more tailored experience.
