# How Does a Lower SSTI Threshold Affect a Systematic Internaliser's Quoting Obligations? ▴ Question

**Published:** 2025-08-01
**Categories:** Question

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## Concept

A downward recalibration of the Size Specific to the Instrument (SSTI) threshold functions as a fundamental alteration to the operating parameters of a [Systematic Internaliser](https://prime.greeks.live/area/systematic-internaliser/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (SI). It directly redefines the boundary between private and public spheres of [liquidity provision](https://prime.greeks.live/area/liquidity-provision/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). An SI operates as a designated liquidity node within the European market architecture, committing its own capital to execute client orders bilaterally. The quoting obligations attached to this role are governed by a sophisticated set of transparency controls, with the SSTI threshold acting as the primary quantitative switch.

This threshold determines at what transaction size an SI’s duty to provide public, firm quotes is activated for [liquid instruments](https://prime.greeks.live/area/liquid-instruments/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). Understanding the effect of lowering this switch requires viewing the SI not as a passive entity, but as a dynamic system engineered to manage risk while providing liquidity. The core function of the SSTI is to shield the SI from the material risk associated with displaying large quotes to the entire market. When a quote is for a size below the SSTI, the SI must make it public, exposing its trading intention and capital commitment. For quotes above this size, the obligation falls away, permitting discreet, bilateral negotiation.

Lowering the [SSTI threshold](https://prime.greeks.live/area/ssti-threshold/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), therefore, is an act of shrinking this protected space. It systematically pulls a larger quantum of an SI’s quoting activity into the pre-trade transparent domain. Transactions that were previously considered large enough to warrant private handling are re-categorized as standard flow, subject to full public disclosure. This is a profound shift in the system’s architecture.

The SI’s operational model is built upon a delicate balance between fulfilling client orders and managing the attendant inventory risk. The SSTI threshold is a key component in maintaining this equilibrium. By lowering it, regulators are deliberately increasing the [pre-trade transparency](https://prime.greeks.live/area/pre-trade-transparency/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) in over-the-counter (OTC) markets, aiming to enhance price discovery for all participants. The direct consequence for the SI is an amplified exposure to [information leakage](https://prime.greeks.live/area/information-leakage/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and the associated adverse selection risks. The system must adapt to a new state where its core function of risk-warehousing becomes more visible and, consequently, more vulnerable.

> Lowering the SSTI threshold systematically increases an SI’s pre-trade transparency obligations by reclassifying a greater portion of its quote flow as public.

The operational logic of an SI is predicated on its ability to price and manage risk effectively. A significant portion of this [risk management](https://prime.greeks.live/area/risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) involves hedging the positions acquired from client trades. When an SI is forced to publicize a firm quote for a larger-than-before trade size, it signals its potential position to the broader market. This signal can be exploited by other market participants, who may trade ahead of the SI’s own hedging activities, moving prices against it.

This phenomenon, known as [adverse selection](https://prime.greeks.live/area/adverse-selection/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), imposes a direct cost on the SI. The original SSTI thresholds were calibrated to represent a size that carried what regulators termed ‘undue risk’ for the market maker. A decision to lower these thresholds implies a regulatory reassessment of what constitutes ‘undue risk’, compelling SIs to internalize a greater degree of this informational risk as a standard cost of doing business. The change impacts the very calculus of liquidity provision, forcing a systemic re-evaluation of which instruments can be quoted profitably and at what price.

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## Strategy

The strategic response of a Systematic Internaliser to a reduced SSTI threshold is a multi-layered adaptation focused on risk mitigation, pricing recalibration, and operational adjustment. The core challenge is managing the amplified information leakage that arises from increased pre-trade transparency obligations. An SI’s primary strategic advantage lies in its ability to leverage its balance sheet to offer clients liquidity.

A lower SSTI threshold directly impacts the cost and risk of deploying that balance sheet. Consequently, the SI must re-architect its approach to client interaction, risk management, and market participation.

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## How Does a Lower SSTI Recalibrate an SI’s Risk Appetite?

A lower SSTI threshold fundamentally alters an SI’s risk-reward calculation for providing quotes. The increased transparency for trades that now fall below the new, lower threshold exposes the SI to greater market impact and potential for adverse selection. High-frequency trading firms and other opportunistic market participants can analyze these public quotes to anticipate the SI’s hedging needs, leading to increased costs for the SI when it seeks to offset its own risk. This heightened vulnerability necessitates a strategic recalibration of the SI’s risk appetite.

This recalibration manifests in several ways:

- 
**Instrument Selectivity** An SI may become more selective in the instruments for which it provides quotes. For less liquid instruments, where hedging is already difficult and costly, the added risk from transparency might make it commercially unviable to continue offering liquidity below the new SSTI. The SI’s strategy may shift towards concentrating its activities in highly [liquid instruments where hedging](https://prime.greeks.live/question/how-does-mifid-ii-distinguish-between-liquid-and-illiquid-instruments/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) costs are lower and the market is deep enough to absorb the information content of its public quotes.

- 
**Client Tiering** SIs may refine their client engagement policies. While [quoting obligations](https://prime.greeks.live/area/quoting-obligations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) must be met in a non-discriminatory manner, the overall commercial relationship can be adjusted. SIs might strategically focus on client flows that are typically very small and fall well below any SSTI threshold (such as retail flow) or, conversely, on wholesale clients whose trades are consistently large enough to remain above the new SSTI. The client segment whose typical trade sizes fall squarely into the newly transparent zone will likely face the most significant changes in service.

- 
**Reduction in Quoted Size** An SI might reduce the maximum size it is willing to quote at or near the new SSTI. While obligated to provide a firm quote when prompted for liquid instruments, the SI retains discretion over the size of that quote. By systematically offering smaller quote sizes, the SI can limit its total risk exposure per transaction, even if it means handling a larger number of smaller trades.

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## Pricing Model Adjustments

The most direct strategic response to increased risk is to adjust pricing. A lower SSTI threshold effectively increases the cost of doing business for an SI, and this cost is systematically passed on to clients through wider bid-ask spreads. The [pricing model](https://prime.greeks.live/question/what-are-the-primary-differences-between-backtesting-a-slippage-model-and-a-profitability-model/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) must be updated to incorporate a larger premium for informational risk.

> An SI’s strategic adaptation involves adjusting its pricing models to account for higher information risk and potentially reducing its liquidity provision in more vulnerable instruments.

The table below illustrates how a [pricing engine](https://prime.greeks.live/area/pricing-engine/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)’s components might be recalibrated.

### Table 1 ▴ SI Pricing Model Recalibration Post-SSTI Reduction

| Pricing Component | Function Pre-SSTI Reduction | Function Post-SSTI Reduction | Strategic Rationale |
| --- | --- | --- | --- |
| Base Spread | Covers operational costs and baseline inventory risk for a given instrument class. | The base spread is widened for all quotes, reflecting a higher systemic risk level. | To compensate for the general increase in market surveillance and the baseline cost of transparency. |
| Size Premium | A premium applied to larger trades that approached the SSTI, reflecting inventory risk. | The premium is now applied more aggressively to trades that are below the new, lower SSTI, as these now carry significant information risk. | To directly price the adverse selection risk associated with making previously large, private quotes public. |
| Liquidity Factor | A discount or premium based on the liquidity of the specific instrument. More liquid instruments had tighter spreads. | The penalty for illiquidity is increased. The model becomes more sensitive to an instrument’s liquidity profile. | Hedging illiquid instruments is harder; the transparency makes this risk acute, justifying a higher cost. |
| Client Score | A factor based on the historical trading behavior of the client (e.g. ‘informed’ vs. ‘uninformed’ flow). | The model’s sensitivity to this score increases. Quotes to clients perceived as having ‘informed’ flow will see significantly wider spreads. | To protect the SI from clients who are more likely to be trading on information that the SI does not possess. |

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## What Is the Impact on the Broader Market Structure?

The strategic decisions of SIs in response to a lower SSTI threshold can have cascading effects on the broader market ecosystem. A widespread widening of spreads by SIs makes this liquidity source more expensive for end-users, particularly institutional clients like asset managers and pension funds. This could lead to a reallocation of trading activity. Clients may seek alternative execution methods, potentially directing more flow to lit markets (traditional exchanges) or other trading venues like Multilateral Trading Facilities (MTFs) and Organised Trading Facilities (OTFs), if they offer more competitive pricing.

This shift could alter the balance between bilateral, SI-driven liquidity and multilateral, venue-driven liquidity, impacting overall market depth and price formation dynamics. It may also create an unlevel playing field, disadvantaging EU-based SIs compared to their international counterparts not subject to the same transparency mandates.

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## Execution

The execution framework of a Systematic Internaliser must be re-engineered to operate within the constraints of a lower SSTI threshold. This is not a superficial policy change; it requires deep modifications to the firm’s technological architecture, trader workflows, and quantitative risk models. The primary objective is to build a system that can compliantly manage the increased transparency requirements while actively mitigating the associated financial risks.

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## Operational Workflow for Quote Management

The life cycle of a client’s Request for Quote ([RFQ](https://prime.greeks.live/area/rfq/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)) inside an SI is the central process affected. The decision-making logic must be hardened to automatically and accurately apply the new SSTI parameter. A failure in this process results in either a compliance breach or uncompensated risk exposure. The following procedural flow outlines the necessary steps an SI’s trading system must execute.

- 
**RFQ Ingestion and Initial Analysis** The system receives an RFQ from a client via its proprietary interface or a multi-dealer platform. The first step is to parse the request, identifying the instrument (e.g. ISIN), desired size, and client identity.

- 
**Instrument Status Verification** The system must perform an immediate lookup against a regularly updated internal database to determine the instrument’s regulatory status. This involves two key checks:

<li>Is the instrument classified as Traded on a Trading Venue (ToTV)?

- Is the instrument currently deemed ‘liquid’ according to the official ESMA classifications?

If the instrument is illiquid or not ToTV, the pre-trade quote transparency obligation under Article 18 does not apply, and the workflow can proceed to a bilateral pricing engine.

</li>
- 
**SSTI Threshold Comparison** This is the critical juncture. If the instrument is liquid and ToTV, the system compares the RFQ size against the new, lower SSTI threshold for that specific instrument class. This threshold value must be managed as a core data element within the system, subject to rigorous change control processes to ensure it always reflects the current regulatory mandate.

- 
**Divergent Execution Paths** Based on the comparison, the workflow splits:

<li>
**Path A (Size ≤ SSTI)** The quote is subject to pre-trade transparency. The pricing engine calculates a quote that incorporates the heightened information risk premium. Before this quote is sent to the client, it must be simultaneously published in a machine-readable format through an [Approved Publication Arrangement](https://prime.greeks.live/area/approved-publication-arrangement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (APA). This ensures it is accessible to other market participants. The system must log the publication details for audit purposes.

- 
**Path B (Size > SSTI)** The quote is not subject to pre-trade transparency. The pricing engine can calculate a quote based on standard inventory risk and bilateral terms. The quote is sent directly and privately to the client. The execution remains off-book, with only post-trade transparency requirements to follow (which may themselves be subject to deferrals).

</li>
- 
**Execution and Hedging** Upon client acceptance of the quote, the trade is executed. The SI’s risk [management system](https://prime.greeks.live/question/what-is-the-relationship-between-an-order-management-system-and-an-execution-management-system/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is immediately updated with the new position. For trades under Path A, the hedging desk must operate with the knowledge that its firm’s position is now more transparent to the market, potentially requiring more sophisticated hedging algorithms to minimize market impact.

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## Quantitative Modeling and Data Analysis

To manage the new reality, an SI’s quantitative team must model the impact of the lowered SSTI. This involves analyzing historical trade data to understand how the distribution of client order sizes maps onto the new thresholds and simulating the financial impact of increased information leakage.

> Executing a compliant strategy under a lower SSTI requires a complete re-engineering of an SI’s quoting workflow and risk-pricing models.

The following table provides a simplified quantitative analysis of the SSTI change for a hypothetical corporate bond SI.

### Table 2 ▴ Impact Analysis of a Lowered SSTI on a Corporate Bond SI

| Metric | Scenario A ▴ Old SSTI (€500k) | Scenario B ▴ New SSTI (€250k) | Quantitative Impact | Operational Implication |
| --- | --- | --- | --- | --- |
| Daily RFQ Flow (Avg. Count) | 5,000 | 5,000 | N/A | Client demand remains constant. |
| % of RFQs Below SSTI | 65% | 85% | +20 percentage points | A significant portion of the business is now subject to pre-trade transparency. |
| Notional Value Below SSTI (€M) | €750M | €1,100M | +€350M | The total value of transparent, risk-bearing quotes increases substantially. |
| Avg. Spread (bps) on newly transparent flow (€250k-€500k) | 15 bps | 22 bps | +7 bps | The information risk premium is explicitly priced in, increasing client costs. |
| Simulated Hedging Slippage Cost (€ daily) | €25,000 | €40,000 | +€15,000 | Increased market impact from hedging more transparent positions leads to direct losses. |

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## System Integration and Technological Architecture

The execution of this strategy is contingent on a robust and flexible technological architecture. The core systems of the SI ▴ the Order Management System (OMS), Execution Management System (EMS), and the pricing engine ▴ must be seamlessly integrated and reconfigured.

- 
**OMS/EMS** The order management system must be enhanced to handle the new regulatory flag (‘Is_Below_SSTI’). This flag must travel with the order throughout its lifecycle and dictate the routing logic. The EMS needs to have native connectivity to the firm’s chosen APA for publishing quotes.

- 
**Pricing Engine** The engine must be able to ingest the ‘Is_Below_SSTI’ flag in real-time and apply the correct pricing model. This requires a dynamic rules-based engine that can switch between a ‘transparent’ pricing model (with higher risk premia) and a ‘bilateral’ model.

- 
**Data Management** A centralized and authoritative source for all regulatory data, especially the instrument-specific SSTI thresholds, is critical. This data store must be updated promptly whenever regulators publish new calibrations. Any lag creates significant compliance risk.

The technological build is a defensive necessity. It allows the SI to continue operating within the new regulatory framework while providing the tools to manage the inescapable increase in operational and market risk.

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## References

- European Securities and Markets Authority. (2020). Consultation Paper | MiFIR report on Systematic Internalisers in non-equity instruments. ESMA.

- International Swaps and Derivatives Association. (n.d.). ISDA Commentary on EC MIFIR proposal ▴ removal of the SSTI threshold. ISDA.

- European Securities and Markets Authority. (2020). ESMA70-156-2756 MiFIR report on systematic internalisers in non-equity instruments. European Union.

- International Swaps and Derivatives Association. (2021). Review of EU MiFID II/ MiFIR Framework The pre-trade transparency and Systematic Internalisers regimes for OTC derivatives. ISDA.

- International Capital Market Association. (n.d.). MiFID II/R Draft Regulatory Technical Standards on transparency requirements in respect of bonds. ICMA.

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## Reflection

The recalibration of a single parameter like the SSTI threshold demonstrates the intricate connectivity of the market’s operating system. It reveals how a targeted regulatory adjustment designed to enhance one system attribute ▴ transparency ▴ can propagate through the entire structure, forcing adaptations in risk management, pricing logic, and competitive strategy. For the principal operating within this system, the challenge is to view these changes not as isolated compliance burdens, but as shifts in the fundamental physics of the market.

A robust operational framework is one that possesses the analytical capacity to model these shifts and the technological agility to reconfigure its execution protocols in response. The ultimate advantage lies in developing a system of intelligence that anticipates the second and third-order effects of regulatory change, transforming a systemic constraint into a calibrated operational response.

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## Glossary

<a href="https://prime.greeks.live/area/systematic-internaliser/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Systematic Internaliser

Meaning ▴ A Systematic Internaliser (SI) is a financial institution executing client orders against its own capital on an organized, frequent, systematic basis off-exchange. </a><a href="https://prime.greeks.live/area/liquidity-provision/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Liquidity Provision

Meaning ▴ Liquidity Provision is the systemic function of supplying bid and ask orders to a market, thereby narrowing the bid-ask spread and facilitating efficient asset exchange. </a><a href="https://prime.greeks.live/area/liquid-instruments/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Liquid Instruments

Meaning ▴ Liquid Instruments are financial contracts or assets characterized by their capacity to be traded swiftly and efficiently at prices closely approximating their intrinsic value, exhibiting minimal market impact and tight bid-ask spreads even for substantial transaction sizes. </a><a href="https://prime.greeks.live/area/ssti-threshold/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Ssti Threshold

Meaning ▴ The SSTI Threshold represents a precisely defined, dynamic control parameter within automated trading systems governing institutional digital asset derivatives. </a><a href="https://prime.greeks.live/area/pre-trade-transparency/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Pre-Trade Transparency

Meaning ▴ Pre-Trade Transparency refers to the real-time dissemination of bid and offer prices, along with associated sizes, prior to the execution of a trade. </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">
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## 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/risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Risk Management

Meaning ▴ Risk Management is the systematic process of identifying, assessing, and mitigating potential financial exposures and operational vulnerabilities within an institutional trading framework. </a><a href="https://prime.greeks.live/area/adverse-selection/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Adverse Selection

Meaning ▴ Adverse selection describes a market condition characterized by information asymmetry, where one participant possesses superior or private knowledge compared to others, leading to transactional outcomes that disproportionately favor the informed party. </a><a href="https://prime.greeks.live/question/how-does-mifid-ii-distinguish-between-liquid-and-illiquid-instruments/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Liquid Instruments Where Hedging

MiFID II distinguishes liquid from illiquid instruments using quantitative criteria to dictate transparency obligations and execution protocols. </a><a href="https://prime.greeks.live/area/quoting-obligations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, dark teal surface contrasts with reflective black and an angular silver mechanism featuring a blue glow and button. This represents an institutional-grade RFQ platform for digital asset derivatives, embodying high-fidelity execution in market microstructure for block trades, optimizing capital efficiency via Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-trading-platform-interface-optimizing-rfq-protocols-for-high-fidelity-execution-and-liquidity-aggregation.jpg)

## Quoting Obligations

Meaning ▴ Quoting Obligations define the mandated responsibility of a market participant, typically a designated market maker or liquidity provider, to continuously display two-sided prices, bid and offer, for a specified digital asset derivative. </a><a href="https://prime.greeks.live/question/what-are-the-primary-differences-between-backtesting-a-slippage-model-and-a-profitability-model/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, light interface, a Principal's Prime RFQ, overlays a dark, intricate market microstructure. This represents institutional-grade digital asset derivatives trading, showcasing high-fidelity execution via RFQ protocols](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-prime-os-execution-system.jpg)

## Pricing Model

A profitability model tests a strategy's theoretical alpha; a slippage model tests its practical viability against market friction. </a><a href="https://prime.greeks.live/area/pricing-engine/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Two diagonal cylindrical elements. The smooth upper mint-green pipe signifies optimized RFQ protocols and private quotation streams](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-microstructure-optimization-1.jpg)

## Pricing Engine

Meaning ▴ A Pricing Engine is a sophisticated computational module designed for the real-time valuation and quotation generation of financial instruments, particularly complex digital asset derivatives. </a><a href="https://prime.greeks.live/area/inventory-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A crystalline sphere, representing aggregated price discovery and implied volatility, rests precisely on a secure execution rail. This symbolizes a Principal's high-fidelity execution within a sophisticated digital asset derivatives framework, connecting a prime brokerage gateway to a robust liquidity pipeline, ensuring atomic settlement and minimal slippage for institutional block trades](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-execution-platform-optimizing-liquidity-and-risk-management-through-advanced-protocols.jpg)

## Inventory Risk

Meaning ▴ Inventory risk quantifies the potential for financial loss resulting from adverse price movements of assets or liabilities held within a trading book or proprietary position. </a><a href="https://prime.greeks.live/area/information-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Engineered components in beige, blue, and metallic tones form a complex, layered structure. This embodies the intricate market microstructure of institutional digital asset derivatives, illustrating a sophisticated RFQ protocol framework for optimizing price discovery, high-fidelity execution, and managing counterparty risk within multi-leg spreads on a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-protocol-stack-optimization.jpg)

## Information Risk

Meaning ▴ Information Risk represents the exposure arising from incomplete, inaccurate, untimely, or misrepresented data that influences critical decision-making processes within institutional digital asset derivatives operations. </a><a href="https://prime.greeks.live/area/rfq/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A teal-colored digital asset derivative contract unit, representing an atomic trade, rests precisely on a textured, angled institutional trading platform. This suggests high-fidelity execution and optimized market microstructure for private quotation block trades within a secure Prime RFQ environment, minimizing slippage](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-engine-optimization.jpg)

## Rfq

Meaning ▴ Request for Quote (RFQ) is a structured communication protocol enabling a market participant to solicit executable price quotations for a specific instrument and quantity from a selected group of liquidity providers. </a><a href="https://prime.greeks.live/area/approved-publication-arrangement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A symmetrical, high-tech digital infrastructure depicts an institutional-grade RFQ execution hub. Luminous conduits represent aggregated liquidity for digital asset derivatives, enabling high-fidelity execution and atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-institutional-digital-asset-derivatives-rfq-system.jpg)

## Approved Publication Arrangement

Meaning ▴ An Approved Publication Arrangement (APA) is a regulated entity authorized to publicly disseminate post-trade transparency data for financial instruments, as mandated by regulations such as MiFID II and MiFIR. </a><a href="https://prime.greeks.live/question/what-is-the-relationship-between-an-order-management-system-and-an-execution-management-system/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Polished concentric metallic and glass components represent an advanced Prime RFQ for institutional digital asset derivatives. It visualizes high-fidelity execution, price discovery, and order book dynamics within market microstructure, enabling efficient RFQ protocols for block trades](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-prime-os-precision.jpg)

## Management System

The OMS codifies investment strategy into compliant, executable orders; the EMS translates those orders into optimized market interaction. </a>

**Tags:** [Liquid Instruments](https://options.greeks.live/area/liquid-instruments/), [Systematic Internalisers](https://options.greeks.live/area/systematic-internalisers/), [Information Leakage](https://options.greeks.live/area/information-leakage/), [Non-Equity Instruments](https://options.greeks.live/area/non-equity-instruments/), [Adverse Selection](https://options.greeks.live/area/adverse-selection/), [Inventory Risk](https://options.greeks.live/area/inventory-risk/)	

## Discover More

- 
### [What Are the Best Practices for a Dealer Responding to a Large-Panel RFQ?](https://options.greeks.live/question/what-are-the-best-practices-for-a-dealer-responding-to-a-large-panel-rfq/)
![Sleek Prime RFQ interface for institutional digital asset derivatives. An elongated panel displays dynamic numeric readouts, symbolizing multi-leg spread execution and real-time market microstructure. A transparent sphere signifies RFQ protocol private quotation and implied volatility, emphasizing atomic settlement and low latency.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-rfq-options.jpg)

A dealer's optimal RFQ response is a systemically-derived price that balances win probability, informational risk, and franchise value.

- 
### [How Does the LIS Waiver Impact Pricing from Liquidity Providers in an RFQ?](https://options.greeks.live/question/how-does-the-lis-waiver-impact-pricing-from-liquidity-providers-in-an-rfq/)
![A transparent glass bar, representing high-fidelity execution and precise RFQ protocols, extends over a white sphere symbolizing a deep liquidity pool for institutional digital asset derivatives. A small glass bead signifies atomic settlement within the granular market microstructure, supported by robust Prime RFQ infrastructure ensuring optimal price discovery and minimal slippage.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-grade-digital-asset-derivatives-rfq-execution-prime-os-intelligence-layer-facilitating-optimal-price-discovery-and-best-execution.jpg)

The LIS waiver structurally reduces liquidity provider risk in an RFQ, enabling tighter pricing by mitigating information leakage.

- 
### [Could a Reduction in LIS Thresholds Fundamentally Alter the Economics of Market Making in Corporate Bonds?](https://options.greeks.live/question/could-a-reduction-in-lis-thresholds-fundamentally-alter-the-economics-of-market-making-in-corporate-bonds/)
![A dark, metallic, circular mechanism with central spindle and concentric rings embodies a Prime RFQ for Atomic Settlement. A precise black bar, symbolizing High-Fidelity Execution via FIX Protocol, traverses the surface, highlighting Market Microstructure for Digital Asset Derivatives and RFQ inquiries, enabling Capital Efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-engine-microstructure-1.jpg)

A reduction in LIS thresholds structurally increases information risk, forcing a direct and fundamental repricing of market-making services.

- 
### [How Do Systematic Internalisers and Venues Using Waivers Differ in Transparency Obligations?](https://options.greeks.live/question/how-do-systematic-internalisers-and-venues-using-waivers-differ-in-transparency-obligations/)
![A stylized abstract radial design depicts a central RFQ engine processing diverse digital asset derivatives flows. Distinct halves illustrate nuanced market microstructure, optimizing multi-leg spreads and high-fidelity execution, visualizing a Principal's Prime RFQ managing aggregated inquiry and latent liquidity.](https://options.greeks.live/wp-content/uploads/2025/07/principal-rfq-execution-engine-optimizing-digital-asset-derivatives-market-microstructure-for-institutional-liquidity-aggregation.jpg)

Systematic Internalisers offer disclosed, principal liquidity, while waiver venues provide anonymous, multilateral interaction by design.

- 
### [What Algorithmic Trading Adjustments Are Necessary Following a Downward Shift in SSTI Thresholds for Derivatives?](https://options.greeks.live/question/what-algorithmic-trading-adjustments-are-necessary-following-a-downward-shift-in-ssti-thresholds-for-derivatives/)
![A precision-engineered system with a central gnomon-like structure and suspended sphere. This signifies high-fidelity execution for digital asset derivatives. Intricate disc patterns denote volatility surface and algorithmic trading. Teal elements represent liquidity pools and Prime RFQ facilitating atomic settlement via RFQ protocol.](https://options.greeks.live/wp-content/uploads/2025/07/precision-engine-for-institutional-digital-asset-derivatives-rfq.jpg)

A downward SSTI shift requires algorithms to price information leakage and fracture hedging activity to mask intent.

- 
### [How Do Regulatory Frameworks Influence Market Maker Obligations and Quote Lifespans?](https://options.greeks.live/question/how-do-regulatory-frameworks-influence-market-maker-obligations-and-quote-lifespans/)
![A sleek blue and white mechanism with a focused lens symbolizes Pre-Trade Analytics for Digital Asset Derivatives. A glowing turquoise sphere represents a Block Trade within a Liquidity Pool, demonstrating High-Fidelity Execution via RFQ protocol for Price Discovery in Dark Pool Market Microstructure.](https://options.greeks.live/wp-content/uploads/2025/07/advanced-institutional-digital-asset-derivatives-rfq-execution-system-for-optimal-price-discovery-and-high-fidelity-execution.jpg)

Regulatory frameworks mandate continuous, firm market maker quotes, influencing their duration and operational agility for optimal liquidity provision.

- 
### [What Are the Key Technological Requirements for Operating a Compliant Systematic Internaliser?](https://options.greeks.live/question/what-are-the-key-technological-requirements-for-operating-a-compliant-systematic-internaliser/)
![A metallic, modular trading interface with black and grey circular elements, signifying distinct market microstructure components and liquidity pools. A precise, blue-cored probe diagonally integrates, representing an advanced RFQ engine for granular price discovery and atomic settlement of multi-leg spread strategies in institutional digital asset derivatives. This optimizes capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-protocol-system-facilitating-high-fidelity-execution-price-discovery.jpg)

A compliant Systematic Internaliser requires an integrated technology stack for quoting, execution, and real-time regulatory reporting.

- 
### [How Do Systematic Internalisers Alter RFQ Dynamics Compared to Traditional Venues?](https://options.greeks.live/question/how-do-systematic-internalisers-alter-rfq-dynamics-compared-to-traditional-venues/)
![A transparent sphere, representing a granular digital asset derivative or RFQ quote, precisely balances on a proprietary execution rail. This symbolizes high-fidelity execution within complex market microstructure, driven by rapid price discovery from an institutional-grade trading engine, optimizing capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-precision-1.jpg)

Systematic Internalisers transform RFQs from competitive auctions into discreet, bilateral negotiations for proprietary liquidity.

- 
### [How Does MiFID II Regulate Systematic Internalisers and Dark Pools Differently?](https://options.greeks.live/question/how-does-mifid-ii-regulate-systematic-internalisers-and-dark-pools-differently/)
![Angular teal and dark blue planes intersect, signifying disparate liquidity pools and market segments. A translucent central hub embodies an institutional RFQ protocol's intelligent matching engine, enabling high-fidelity execution and precise price discovery for digital asset derivatives, integral to a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-execution-hub-for-market-microstructure.jpg)

MiFID II regulates SIs via quoting duties for bilateral principal trading and dark pools via volume caps on multilateral anonymous matching.

---

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---

**Original URL:** https://options.greeks.live/question/how-does-a-lower-ssti-threshold-affect-a-systematic-internalisers-quoting-obligations/
