# How Are Quotes Submitted in an RFQ? ▴ Question

**Published:** 2025-07-30
**Categories:** Question

---

![Symmetrical beige and translucent teal electronic components, resembling data units, converge centrally. This Institutional Grade RFQ execution engine enables Price Discovery and High-Fidelity Execution for Digital Asset Derivatives, optimizing Market Microstructure and Latency via Prime RFQ for Block Trades](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-microstructure-engine.jpg)

![A sleek, institutional-grade device, with a glowing indicator, represents a Prime RFQ terminal. Its angled posture signifies focused RFQ inquiry for Digital Asset Derivatives, enabling high-fidelity execution and precise price discovery within complex market microstructure, optimizing latent liquidity](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-execution-terminal-facilitating-high-fidelity-price-discovery-and-optimal-liquidity-aggregation.jpg)

## Concept

The submission of a quote within a Request for Quote (RFQ) protocol represents a foundational act of institutional trading. It is the point where latent demand translates into a firm, executable price through a discreet, bilateral negotiation. An RFQ is an architecture for controlled [price discovery](https://prime.greeks.live/area/price-discovery/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), engineered to solve the cardinal challenge of institutional-scale orders which is sourcing liquidity and executing trades without broadcasting intent to the wider market, thereby preventing adverse price movements. The process is initiated when a liquidity taker, such as a portfolio manager or trading desk, sends a targeted inquiry for a specific instrument to a select group of liquidity providers.

These providers, typically dealer banks or specialized market-making firms, are chosen based on their perceived capacity to handle the size and specific risk profile of the asset in question. Their response, the quote, is a binding offer to buy or sell a specified quantity at a specified price, valid for a defined period. This entire interaction operates outside the [central limit order book](https://prime.greeks.live/area/central-limit-order-book/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (CLOB), creating a private channel for sourcing liquidity that protects the initiator from the [information leakage](https://prime.greeks.live/area/information-leakage/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) inherent in lit markets. The system’s integrity rests on this controlled dissemination of information, allowing large blocks of securities to be priced and traded with minimal market impact.

> The RFQ mechanism is an engineered solution for accessing targeted, off-book liquidity while minimizing the signaling risk associated with large institutional orders.

![Two robust, intersecting structural beams, beige and teal, form an 'X' against a dark, gradient backdrop with a partial white sphere. This visualizes institutional digital asset derivatives RFQ and block trade execution, ensuring high-fidelity execution and capital efficiency through Prime RFQ FIX Protocol integration for atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-optimized-execution.jpg)

## What Is the Core Function of a Quote Solicitation Protocol?

The primary function of a [quote solicitation](https://prime.greeks.live/area/quote-solicitation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) protocol is to establish a competitive, yet private, environment for price formation. By soliciting quotes from multiple dealers simultaneously, the initiator creates a competitive auction for their order. This competition incentivizes dealers to provide their best price, given their current inventory, risk appetite, and hedging costs. The protocol provides a structured framework for this competition, defining the rules of engagement, communication standards, and time constraints.

This structured approach ensures that the price discovery process is efficient and auditable, providing a clear record of how the execution price was achieved. It transforms the ad-hoc nature of over-the-counter trading into a systematic, repeatable, and optimized workflow.

![A translucent, faceted sphere, representing a digital asset derivative block trade, traverses a precision-engineered track. This signifies high-fidelity execution via an RFQ protocol, optimizing liquidity aggregation, price discovery, and capital efficiency within institutional market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-block-trade-high-fidelity-execution-protocol-prime-os-path.jpg)

![Central axis, transparent geometric planes, coiled core. Visualizes institutional RFQ protocol for digital asset derivatives, enabling high-fidelity execution of multi-leg options spreads and price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-engine-2.jpg)

## Strategy

The strategic dimension of the RFQ process extends far beyond the simple submission of a price. For both the initiator and the responder, every step is a calculated decision within a complex system of risk, information, and relationships. The effectiveness of the entire protocol is contingent on the strategic choices made by its participants. A proficiently managed RFQ strategy becomes a significant source of competitive advantage, directly influencing [execution quality](https://prime.greeks.live/area/execution-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and capital efficiency.

![A polished, abstract geometric form represents a dynamic RFQ Protocol for institutional-grade digital asset derivatives. A central liquidity pool is surrounded by opening market segments, revealing an emerging arm displaying high-fidelity execution data](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-institutional-digital-asset-derivatives-rfq-protocol-system.jpg)

## Counterparty Curation and Inquiry Design

The initial and most impactful strategic decision for a liquidity taker is the selection of counterparties. This is a dynamic curation process based on quantitative and qualitative data. A trading desk will maintain detailed performance metrics on each dealer, analyzing historical fill rates, quote competitiveness, and post-trade price stability. The goal is to build a panel of providers best suited for a specific asset class, trade size, or market condition.

Sending an RFQ to too many dealers increases the risk of information leakage, while sending to too few may result in suboptimal pricing. The design of the inquiry itself is also a strategic lever. A ‘sided’ request, which specifies buy or sell intent, provides more information to the dealer but may result in a more aggressive quote. A ‘side-neutral’ request masks intent, forcing dealers to provide a two-sided market, which can offer a clearer view of their pricing but may be wider. For complex positions, multi-leg RFQs allow for the pricing of an entire spread or strategy as a single package, ensuring execution on all components simultaneously.

> A successful RFQ strategy integrates counterparty performance data with intelligent inquiry design to create a competitive auction tailored to the specific order.

![Illuminated conduits passing through a central, teal-hued processing unit abstractly depict an Institutional-Grade RFQ Protocol. This signifies High-Fidelity Execution of Digital Asset Derivatives, enabling Optimal Price Discovery and Aggregated Liquidity for Multi-Leg Spreads](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-high-fidelity-best-execution.jpg)

## Comparative Analysis of Liquidity Sourcing Protocols

The decision to use an RFQ is itself a strategic choice, weighed against other methods of sourcing institutional liquidity. Each protocol offers a different balance of transparency, market impact, and price discovery, making them suitable for different objectives.

| Protocol | Transparency | Market Impact | Counterparty Selection | Price Certainty |
| --- | --- | --- | --- | --- |
| Request for Quote (RFQ) | Pre-trade opacity; post-trade transparency. | Low, due to contained information. | Controlled and selective. | High, upon quote acceptance. |
| Dark Pool | Pre-trade and post-trade opacity. | Very low, but fill is uncertain. | Anonymous. | Low; price derived from lit market midpoint. |
| Central Limit Order Book (CLOB) | Full pre-trade and post-trade transparency. | High for large orders. | Open to all participants. | Low; price depends on available depth. |

![Two sleek, polished, curved surfaces, one dark teal, one vibrant teal, converge on a beige element, symbolizing a precise interface for high-fidelity execution. This visual metaphor represents seamless RFQ protocol integration within a Principal's operational framework, optimizing liquidity aggregation and price discovery for institutional digital asset derivatives via algorithmic trading](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-interface-for-institutional-digital-asset-derivatives.jpg)

## The Responder’s Pricing Calculus

From the dealer’s perspective, submitting a quote is a sophisticated risk management calculation. The price they offer is a function of several variables. The first is inventory risk; if the request is to buy an asset the dealer is already long, they may offer a more competitive price to reduce their position. The second is hedging cost; the dealer must factor in the expense of hedging the position they will take on if their quote is accepted.

Finally, the dealer assesses the information content of the request itself. A request from a well-informed institutional client may signal future market movement, a factor that gets priced into the quote as a form of adverse selection premium. This complex calculus is increasingly performed by sophisticated algorithms that can analyze these factors in real-time to produce an optimal quote.

![Prime RFQ visualizes institutional digital asset derivatives RFQ protocol and high-fidelity execution. Glowing liquidity streams converge at intelligent routing nodes, aggregating market microstructure for atomic settlement, mitigating counterparty risk within dark liquidity](https://options.greeks.live/wp-content/uploads/2025/08/prime-os-high-fidelity-digital-asset-derivatives-rfq-protocol.jpg)

![An abstract view reveals the internal complexity of an institutional-grade Prime RFQ system. Glowing green and teal circuitry beneath a lifted component symbolizes the Intelligence Layer powering high-fidelity execution for RFQ protocols and digital asset derivatives, ensuring low latency atomic settlement](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-prime-os-core-engine-for-rfq-protocol-execution.jpg)

## Execution

The execution of an RFQ is a function of precise, high-speed communication protocols operating within a robust technological framework. At this level, strategic objectives are translated into operational reality through standardized messaging and automated systems. Mastering the mechanics of execution is what separates adequate performance from superior capital efficiency. The entire process, from request to fill, is an orchestrated sequence of data exchange governed by established industry standards.

![A dynamic composition depicts an institutional-grade RFQ pipeline connecting a vast liquidity pool to a split circular element representing price discovery and implied volatility. This visual metaphor highlights the precision of an execution management system for digital asset derivatives via private quotation](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-pipeline-for-precise-price-discovery-and-volatility-surface-analysis.jpg)

## The Role of the Financial Information Exchange Protocol

The backbone of modern RFQ workflows is the Financial Information Exchange (FIX) protocol. FIX is the universal messaging standard that enables disparate trading systems from buy-side firms, sell-side dealers, and trading venues to communicate seamlessly. When a quote is submitted, it is not an email or a phone call, but a highly structured electronic message.

The use of FIX ensures that all participants are speaking the same language, which eliminates ambiguity and allows for the high degree of automation that defines modern institutional trading. The protocol defines the specific message types and data fields required for each stage of the RFQ lifecycle.

![An institutional-grade RFQ Protocol engine, with dual probes, symbolizes precise price discovery and high-fidelity execution. This robust system optimizes market microstructure for digital asset derivatives, ensuring minimal latency and best execution](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-protocol-engine-for-optimal-price-discovery-and-high-fidelity-execution.jpg)

## Key FIX Message Flows in an RFQ

The submission and execution process follows a logical, standardized sequence of FIX messages. This ensures that every action is discrete, timestamped, and auditable.

- **QuoteRequest (MsgType=R)** ▴ The process begins when the initiator sends a QuoteRequest message to its selected counterparties. This message specifies the instrument, quantity, and other relevant parameters.

- **Quote (MsgType=S)** ▴ In response, each dealer submits a Quote message. This message contains their firm bid and/or offer price, the quantity they are willing to trade at that price, and a validity period for the quote.

- **NewOrderSingle (MsgType=D)** ▴ After evaluating the responses, the initiator accepts the desired quote by sending a NewOrderSingle message to the winning dealer, effectively transforming the quote into an executable order.

- **ExecutionReport (MsgType=8)** ▴ The final step is the dealer’s confirmation of the trade via an ExecutionReport message, which provides the final details of the fill.

> The FIX protocol provides the standardized syntax for RFQ communication, enabling the automation and interoperability required for efficient institutional execution.

![A prominent domed optic with a teal-blue ring and gold bezel. This visual metaphor represents an institutional digital asset derivatives RFQ interface, providing high-fidelity execution for price discovery within market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/precision-optic-interface-for-institutional-digital-asset-derivatives-rfq-protocol-execution-and-high-fidelity-price-discovery.jpg)

## What Are the Critical Data Fields in a Quote Submission?

Within a FIX Quote message, specific data fields carry the critical information that defines the dealer’s offer. Understanding these fields is essential for interpreting and acting upon a submitted quote.

| FIX Tag | Field Name | Description | Strategic Implication |
| --- | --- | --- | --- |
| 117 | QuoteID | A unique identifier for the quote. | Essential for tracking and referencing the specific offer in a high-volume environment. |
| 134 | BidPx | The firm price at which the dealer is willing to buy. | The executable price for a sell order from the initiator. |
| 135 | OfferPx | The firm price at which the dealer is willing to sell. | The executable price for a buy order from the initiator. |
| 62 | ValidUntilTime | The timestamp until which the quote is firm. | Defines the decision window for the initiator; a critical risk parameter for the dealer. |
| 38 | OrderQty | The quantity of the instrument being quoted. | Specifies the size for which the price is valid. |

![A teal sphere with gold bands, symbolizing a discrete digital asset derivative block trade, rests on a precision electronic trading platform. This illustrates granular market microstructure and high-fidelity execution within an RFQ protocol, driven by a Prime RFQ intelligence layer](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivative-rfq-protocol-high-fidelity-execution-platform-microstructure-intelligence-layer.jpg)

## Automated Quoting Systems

On the sell-side, the response to RFQs is now dominated by automated systems. These [algorithmic quoting](https://prime.greeks.live/area/algorithmic-quoting/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) engines are designed to ingest incoming QuoteRequest messages, run them through a complex pricing and risk model, and generate a competitive quote in milliseconds. This automation allows dealers to respond to a massive volume of inquiries simultaneously and consistently apply their risk management parameters.

For the buy-side, this means faster response times and more consistently priced liquidity. These systems are a core component of the market’s operational infrastructure, enabling the RFQ protocol to function at scale.

![A sleek, dark, metallic system component features a central circular mechanism with a radiating arm, symbolizing precision in High-Fidelity Execution. This intricate design suggests Atomic Settlement capabilities and Liquidity Aggregation via an advanced RFQ Protocol, optimizing Price Discovery within complex Market Microstructure and Order Book Dynamics on a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-prime-os-high-fidelity-execution-protocol-liquidity-market-microstructure.jpg)

## References

- Barzykin, Alexander, Philippe Bergault, and Olivier Guéant. “Liquidity Dynamics in RFQ Markets and Impact on Pricing.” _arXiv preprint arXiv:2309.04216_, 2023.

- Biais, Bruno, Larry Glosten, and Chester Spatt. “Market Microstructure ▴ A Survey of Microfoundations, Empirical Results, and Policy Implications.” _Journal of Financial Markets_, vol. 5, no. 2, 2002, pp. 217-264.

- O’Hara, Maureen. _Market Microstructure Theory_. Blackwell Publishers, 1995.

- FIX Trading Community. “FIX Protocol Version 4.4 Specification.” _FIX Trading Community_, 2003.

- BlackRock. “Best Execution and Order Placement Disclosure.” _BlackRock Investment Management_, 2023.

- Greenwich Associates. “High-Touch Trading’s New Trajectory.” _Greenwich Associates Report_, 2017.

- InfoReach, Inc. “Dealer ETFs Rules of Engagement FIX 4.4 PROTOCOL SPECIFICATIONS.” _InfoReach_, 2020.

- Tradeweb Markets. “Reimagining RFQ ▴ Automation, innovation, data and beyond.” _Tradeweb Video_, 2022.

![A central, metallic, complex mechanism with glowing teal data streams represents an advanced Crypto Derivatives OS. It visually depicts a Principal's robust RFQ protocol engine, driving high-fidelity execution and price discovery for institutional-grade digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-engine-8.jpg)

## Reflection

![A complex, multi-layered electronic component with a central connector and fine metallic probes. This represents a critical Prime RFQ module for institutional digital asset derivatives trading, enabling high-fidelity execution of RFQ protocols, price discovery, and atomic settlement for multi-leg spreads with minimal latency](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-rfq-engine-driving-best-execution-and-liquidity.jpg)

## Calibrating the Execution Architecture

Understanding how quotes are submitted is foundational. The truly differentiating capability, however, lies in viewing the entire RFQ process as an integrated component of your firm’s execution architecture. The quality of your execution is a direct output of the quality of your system’s design. This system encompasses your counterparty evaluation models, your intelligent routing logic for when to use an RFQ versus another protocol, and the feedback loops that continuously refine both.

Each quote received is a data point, a signal about a counterparty’s risk appetite and market view at a specific moment. Each execution provides feedback on the efficacy of your strategy. The ultimate objective is to construct a self-improving operational framework where technology, data, and human expertise work in concert. The question then becomes how you are engineering your own protocols to transform the flow of quotes from a simple transactional process into a source of persistent strategic intelligence.

![A central illuminated hub with four light beams forming an 'X' against dark geometric planes. This embodies a Prime RFQ orchestrating multi-leg spread execution, aggregating RFQ liquidity across diverse venues for optimal price discovery and high-fidelity execution of institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-orchestrating-high-fidelity-execution-and-optimal-price-discovery.jpg)

## Glossary

<a href="https://prime.greeks.live/area/price-discovery/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision-engineered metallic institutional trading platform, bisected by an execution pathway, features a central blue RFQ protocol engine. This Crypto Derivatives OS core facilitates high-fidelity execution, optimal price discovery, and multi-leg spread trading, reflecting advanced market microstructure](https://options.greeks.live/wp-content/uploads/2025/08/precision-engineered-institutional-digital-asset-derivatives-execution-core-facilitating-rfq-protocol-driven-optimal-price-discovery-and-multi-leg-spread-trading-for-capital-efficiency.jpg)

## Price Discovery

Meaning ▴ Price discovery is the continuous, dynamic process by which the market determines the fair value of an asset through the collective interaction of supply and demand. </a><a href="https://prime.greeks.live/area/central-limit-order-book/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A luminous digital market microstructure diagram depicts intersecting high-fidelity execution paths over a transparent liquidity pool. A central RFQ engine processes aggregated inquiries for institutional digital asset derivatives, optimizing price discovery and capital efficiency within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-principal-operational-framework-price-discovery.jpg)

## Central Limit Order Book

Meaning ▴ A Central Limit Order Book is a digital repository that aggregates all outstanding buy and sell orders for a specific financial instrument, organized by price level and time of entry. </a><a href="https://prime.greeks.live/area/information-leakage/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A polished, segmented metallic disk with internal structural elements and reflective surfaces. This visualizes a sophisticated RFQ protocol engine, representing the market microstructure of institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-1.jpg)

## Information Leakage

Meaning ▴ Information leakage denotes the unintended or unauthorized disclosure of sensitive trading data, often concerning an institution's pending orders, strategic positions, or execution intentions, to external market participants. </a><a href="https://prime.greeks.live/area/quote-solicitation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Two smooth, teal spheres, representing institutional liquidity pools, precisely balance a metallic object, symbolizing a block trade executed via RFQ protocol. This depicts high-fidelity execution, optimizing price discovery and capital efficiency within a Principal's operational framework for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/precision-execution-bridging-institutional-liquidity-pools-via-rfq-protocol-for-optimized-digital-asset-derivatives-price-discovery.jpg)

## Quote Solicitation

Meaning ▴ Quote Solicitation is a formalized electronic request for price information for a specific financial instrument, typically sent by a buy-side entity to one or more liquidity providers. </a><a href="https://prime.greeks.live/area/execution-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A translucent digital asset derivative, like a multi-leg spread, precisely penetrates a bisected institutional trading platform. This reveals intricate market microstructure, symbolizing high-fidelity execution and aggregated liquidity, crucial for optimal RFQ price discovery within a Principal's Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-execution-platform-microstructure.jpg)

## Execution Quality

Meaning ▴ Execution Quality quantifies the efficacy of an order's fill, assessing how closely the achieved trade price aligns with the prevailing market price at submission, alongside consideration for speed, cost, and market impact. </a><a href="https://prime.greeks.live/area/algorithmic-quoting/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sophisticated institutional digital asset derivatives platform unveils its core market microstructure. Intricate circuitry powers a central blue spherical RFQ protocol engine on a polished circular surface](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-prime-os-unveiling-rfq-protocol-engine-market-microstructure-for-optimal-price-discovery-and-high-fidelity-execution.jpg)

## Algorithmic Quoting

Meaning ▴ Algorithmic Quoting denotes the automated generation and continuous submission of bid and offer prices for financial instruments within a defined market, aiming to provide liquidity and capture bid-ask spread. </a>

**Tags:** [Algorithmic Quoting](https://options.greeks.live/area/algorithmic-quoting/), [FIX Protocol](https://options.greeks.live/area/fix-protocol/), [Multi-Leg Spreads](https://options.greeks.live/area/multi-leg-spreads/), [Quote Solicitation](https://options.greeks.live/area/quote-solicitation/), [Systemic Risk](https://options.greeks.live/area/systemic-risk/), [Central Limit Order Book](https://options.greeks.live/area/central-limit-order-book/)	

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---

**Original URL:** https://options.greeks.live/question/how-are-quotes-submitted-in-an-rfq/
