# How Does Information Asymmetry between Dealers and Clients Impact RFQ Pricing? ▴ Question

**Published:** 2025-08-05
**Categories:** Question

---

![A futuristic circular financial instrument with segmented teal and grey zones, centered by a precision indicator, symbolizes an advanced Crypto Derivatives OS. This system facilitates institutional-grade RFQ protocols for block trades, enabling granular price discovery and optimal multi-leg spread execution across diverse liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-microstructure-platform.jpg)

![A sleek, cream-colored, dome-shaped object with a dark, central, blue-illuminated aperture, resting on a reflective surface against a black background. This represents a cutting-edge Crypto Derivatives OS, facilitating high-fidelity execution for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-prime-os-high-fidelity-rfq-execution-engine-intelligence-layer.jpg)

## Concept

The request-for-quote protocol exists to solve a specific, high-stakes problem ▴ the execution of an order too large or too specialized for the transparent liquidity of a [central limit order book](https://prime.greeks.live/area/central-limit-order-book/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). Your objective is to transfer a significant risk position with minimal [market impact](https://prime.greeks.live/area/market-impact/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). The dealer’s objective is to price that risk profitably without being systematically selected only when the odds are stacked against them. At the core of this interaction is a fundamental imbalance of knowledge.

[Information asymmetry](https://prime.greeks.live/area/information-asymmetry/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is the central variable that dictates the pricing, risk, and outcome of every RFQ auction. It is the unseen force that widens spreads and determines which party extracts value from the transaction.

This asymmetry manifests in two primary forms within the bilateral [price discovery](https://prime.greeks.live/area/price-discovery/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) process. The first, and most potent, is [adverse selection](https://prime.greeks.live/area/adverse-selection/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). This occurs when the client possesses superior information about the short-term trajectory of the asset or the toxicity of their own order flow. A client initiating a large sell order because they have a fundamental view that the asset is overvalued, or because they are unwinding a much larger position across multiple venues, places the dealer at a significant disadvantage.

The dealer who wins the auction and buys the asset may find themselves holding a depreciating position, a phenomenon known as the ‘winner’s curse’. The market systematically selects them to take on risk precisely when it is most disadvantageous.

> Information asymmetry in RFQ markets is a structural condition where one party holds more decisive information than the other, directly influencing pricing and risk transfer.

The second form is moral hazard, which pertains to the actions of the dealer after providing a quote. A dealer might provide a competitive quote but then be slow to honor it, or attempt to hedge their acquired position so aggressively that they move the market against the client’s remaining position. While platform-level controls like firm-up timers can mitigate this, the potential for post-quote opportunism remains a component of the informational structure.

For the institutional client, understanding these dynamics is the first principle of effective execution. Your strategy must be built upon the recognition that every quote you receive is not a pure reflection of an asset’s value; it is a reflection of the asset’s value adjusted for the dealer’s perception of your informational advantage.

![A macro view reveals a robust metallic component, signifying a critical interface within a Prime RFQ. This secure mechanism facilitates precise RFQ protocol execution, enabling atomic settlement for institutional-grade digital asset derivatives, embodying high-fidelity execution](https://options.greeks.live/wp-content/uploads/2025/07/core-secure-institutional-digital-asset-derivatives-rfq-trade-system-element.jpg)

## The Architecture of Asymmetry

The structure of the RFQ market itself contributes to these informational imbalances. Unlike a lit order book where all participants see the same depth and trades in real-time, an RFQ auction is a series of private, bilateral conversations. The client sees all the quotes, but each dealer only sees their own.

This fragmented view means dealers must price in the dark, relying on historical data, [client tiering](https://prime.greeks.live/area/client-tiering/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), and real-time market signals to estimate the risk of being adversely selected. The opacity of the process, designed to protect the client from [information leakage](https://prime.greeks.live/area/information-leakage/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) to the broader market, simultaneously creates the conditions for informational friction between the client and the dealer panel.

![A beige, triangular device with a dark, reflective display and dual front apertures. This specialized hardware facilitates institutional RFQ protocols for digital asset derivatives, enabling high-fidelity execution, market microstructure analysis, optimal price discovery, capital efficiency, block trades, and portfolio margin](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-terminal-for-high-fidelity-execution-and-precise-market-microstructure-analysis.jpg)

## Adverse Selection Vs Market Impact

It is essential to distinguish between the cost of adverse selection and the cost of market impact. Market impact is the price slippage caused by the physical act of executing a large trade, regardless of the informational content behind it. Adverse selection is the additional cost imposed on a dealer for systematically trading with better-informed counterparties. A dealer’s pricing model must account for both.

The spread they quote includes a component for the expected market impact of hedging their new position, and a separate, often larger, component for the risk that the client knows something they do not. Quantifying this “[adverse selection premium](https://prime.greeks.live/area/adverse-selection-premium/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)” is the core challenge for any sophisticated market maker.

![A robust green device features a central circular control, symbolizing precise RFQ protocol interaction. This enables high-fidelity execution for institutional digital asset derivatives, optimizing market microstructure, capital efficiency, and complex options trading within a Crypto Derivatives OS](https://options.greeks.live/wp-content/uploads/2025/07/institutional-grade-digital-asset-derivatives-rfq-protocol-interface-for-precise-market-microstructure-execution.jpg)

![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)

## Strategy

Navigating the informational complexities of RFQ markets requires a deliberate, architected strategy from both sides of the trade. For the institutional client, the primary goal is to secure competitive pricing while minimizing the information leakage that leads to wider spreads and higher execution costs. For the dealer, the strategy is to price competitively enough to win business without systematically incurring losses from the winner’s curse. These opposing objectives create a strategic game where information management is the key to success.

> Effective RFQ strategy centers on controlling the flow of information to influence pricing outcomes favorably.

![A sleek, circular, metallic-toned device features a central, highly reflective spherical element, symbolizing dynamic price discovery and implied volatility for Bitcoin options. This private quotation interface within a Prime RFQ platform enables high-fidelity execution of multi-leg spreads via RFQ protocols, minimizing information leakage and slippage](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-institutional-digital-asset-derivatives-rfq-execution-hub.jpg)

## Client-Side Strategic Frameworks

An institution’s approach to sourcing liquidity via RFQ must be dynamic and data-driven. A simplistic “spray-and-pray” method, where a quote request is sent to the maximum number of dealers, is often counterproductive. While it may seem that more competition should lead to better prices, it can also signal a low-information or high-urgency trade, causing all dealers to widen their spreads to compensate for the perceived risk. A more sophisticated approach involves segmenting dealers and managing the auction process intelligently.

- **Dealer Tiering** ▴ Clients can categorize dealers into tiers based on historical performance, balance sheet capacity, and the types of risk they typically absorb well. A Tier 1 dealer might receive the first request for a large, difficult-to-price trade, while a broader set of dealers might be queried for more liquid assets. 

- **Sequential and Staggered RFQs** ▴ Instead of querying all dealers simultaneously, a client can send requests in waves. This allows the client to gather initial pricing information from a small group before approaching a wider panel, using the initial quotes as a benchmark. This method can reduce the overall information footprint of the trade. 

- **[Algorithmic Integration](https://prime.greeks.live/area/algorithmic-integration/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)** ▴ For orders that can be broken up, a hybrid approach can be effective. A portion of the order might be executed via an algorithmic strategy (like a VWAP or TWAP) on lit markets to establish a non-urgent trading pattern, while the remaining block is executed via a targeted RFQ. This masks the full size and intent of the parent order. 

![A sophisticated apparatus, potentially a price discovery or volatility surface calibration tool. A blue needle with sphere and clamp symbolizes high-fidelity execution pathways and RFQ protocol integration within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-institutional-digital-asset-derivatives-execution.jpg)

## What Is the Optimal Number of Dealers to Query?

There is a distinct trade-off between the competitive benefits of adding another dealer to an auction and the information leakage costs. Each additional dealer increases the probability of finding the single best price at that moment. However, it also increases the number of market participants who know a large trade is being shopped, raising the risk of pre-hedging and market movement against the client.

The optimal number is a function of the asset’s liquidity, the trade’s size relative to average daily volume, and the client’s historical relationship with the dealer panel. Post-trade [Transaction Cost Analysis](https://prime.greeks.live/area/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (TCA) is vital for refining this process over time.

![A sleek, metallic platform features a sharp blade resting across its central dome. This visually represents the precision of institutional-grade digital asset derivatives RFQ execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-precision-1.jpg)

## Dealer-Side Pricing and Risk Management

Dealers operate as sophisticated risk managers, and their pricing strategy reflects a deep understanding of information asymmetry. Their goal is to build a profitable, diversified flow of client business. This requires them to price aggressively for uninformed order flow while protecting themselves from the informed flow that leads to adverse selection. In illiquid markets like corporate bonds, dealers must estimate a mid-price from fragmented data points before even beginning to construct a client-specific quote. 

The core of a dealer’s strategy is the “adverse [selection premium](https://prime.greeks.live/question/how-does-the-structure-of-an-illiquid-asset-itself-affect-the-adverse-selection-premium/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite),” a component of the bid-ask spread that acts as an insurance policy against informed traders. The size of this premium is not static; it is a dynamic calculation based on several factors.

### Illustrative Dealer Pricing Model Components

| Client Tier | Perceived Information Level | Trade Characteristics | Adverse Selection Premium (bps) | Resulting Spread Adjustment |
| --- | --- | --- | --- | --- |
| Tier 1 (e.g. Sovereign Wealth Fund) | Low / Diversified Flow | Liquid Asset, Small Size | 0.5 – 1.5 | Minimal |
| Tier 2 (e.g. Asset Manager) | Medium / Mixed Flow | Liquid Asset, Large Size | 2.0 – 4.0 | Moderate |
| Tier 3 (e.g. Hedge Fund) | Potentially High | Illiquid Asset, Any Size | 5.0 – 15.0 | Significant |
| Anonymous / New Client | Unknown / Assumed High | Any Trade | 10.0 – 25.0 | Maximum |

![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)

![Polished metallic rods, spherical joints, and reflective blue components within beige casings, depict a Crypto Derivatives OS. This engine drives institutional digital asset derivatives, optimizing RFQ protocols for high-fidelity execution, robust price discovery, and capital efficiency within complex market microstructure via algorithmic trading](https://options.greeks.live/wp-content/uploads/2025/07/optimized-rfq-protocol-engine-driving-institutional-digital-asset-derivatives-market-microstructure-execution.jpg)

## Execution

The execution phase is where strategic theory meets operational reality. For both the client and the dealer, successful execution is a function of robust technological architecture, disciplined process, and quantitative analysis. The abstract concept of an “adverse selection premium” is translated into a concrete basis point cost, and the client’s strategy for minimizing information leakage is implemented through a precise set of actions within their Order Management System (OMS) or Execution Management System (EMS).

![A sleek, angled object, featuring a dark blue sphere, cream disc, and multi-part base, embodies a Principal's operational framework. This represents an institutional-grade RFQ protocol for digital asset derivatives, facilitating high-fidelity execution and price discovery within market microstructure, optimizing capital efficiency](https://options.greeks.live/wp-content/uploads/2025/08/prime-os-rfq-for-institutional-digital-asset-derivatives-execution.jpg)

## The Operational Playbook for Client Execution

An institutional client seeking to execute a large [block trade](https://prime.greeks.live/area/block-trade/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) in an illiquid derivative or corporate bond must operate with surgical precision. The following operational playbook outlines a systematic approach to managing information asymmetry during the RFQ process.

- **Pre-Trade Analysis** ▴ Before initiating any RFQ, the trader must analyze the characteristics of the order. This involves assessing the asset’s current liquidity, recent price volatility, and the order’s size relative to the market’s capacity. The output of this analysis is a “trade difficulty” score that informs the subsequent steps. 

- **Dealer Panel Curation** ▴ Based on the trade difficulty score, the trader curates a specific list of dealers. For a highly difficult trade, this might be a small panel of 2-3 trusted, high-capacity dealers. For a more standard trade, the panel might expand to 5-7 dealers. The full list of available dealers is rarely, if ever, used. 

- **Staggered Auction Launch** ▴ The RFQ is launched in stages. Wave 1 might go to the 2-3 Tier 1 dealers. The responses are analyzed to establish a baseline price. If the pricing is acceptable and the dealers can absorb the full size, the auction may conclude there. If not, Wave 2 is initiated to a slightly wider panel, using the Wave 1 prices as a benchmark for performance. 

- **Execution and Allocation** ▴ The winning quote is selected based on price, but also on the dealer’s ability to handle the size without causing market disruption. The trade is executed electronically, and the confirmation is received directly into the OMS. 

- **Post-Trade TCA** ▴ Immediately following the execution, a Transaction Cost Analysis report is generated. This report compares the execution price against various benchmarks (e.g. arrival price, volume-weighted average price) and, crucially, against the quotes from all participating dealers. This data is fed back into the dealer tiering model to refine future panel selections. 

![A glossy, teal sphere, partially open, exposes precision-engineered metallic components and white internal modules. This represents an institutional-grade Crypto Derivatives OS, enabling secure RFQ protocols for high-fidelity execution and optimal price discovery of Digital Asset Derivatives, crucial for prime brokerage and minimizing slippage](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-platform-revealing-core-rfq-protocol-mechanisms-for-optimized-high-fidelity-execution.jpg)

## How Does Technology Mitigate Information Risk?

Modern execution platforms are designed to manage the flow of information. Features like anonymous RFQs, where the client’s identity is shielded from the dealer until after the trade is complete, can help neutralize the dealer’s ability to price based on past client behavior. Similarly, platforms that aggregate data and provide pre-trade price estimates can give clients a more accurate benchmark, reducing their reliance on the dealers’ quotes alone and helping them spot outliers more effectively. Machine learning models are increasingly used to provide these reference prices, especially in fragmented markets like corporate bonds. 

> A disciplined execution protocol transforms the abstract risk of information asymmetry into a measurable and manageable cost.

![Sleek, abstract system interface with glowing green lines symbolizing RFQ pathways and high-fidelity execution. This visualizes market microstructure for institutional digital asset derivatives, emphasizing private quotation and dark liquidity within a Prime RFQ framework, enabling best execution and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-for-institutional-digital-asset-derivatives.jpg)

## Quantitative Modeling of Execution Costs

The impact of information asymmetry can be quantified through rigorous post-trade analysis. By comparing different execution strategies for similar trades, a firm can build a data-driven understanding of how its actions affect its costs. The following table provides a hypothetical TCA comparison for a $50 million block trade in a corporate bond, contrasting a wide auction with a targeted, tiered auction.

### TCA Comparison of RFQ Execution Strategies

| Metric | Strategy A ▴ Wide Auction (“Spray and Pray”) | Strategy B ▴ Targeted Auction (Tiered) | Analysis |
| --- | --- | --- | --- |
| Number of Dealers Queried | 15 | 5 (3 in Wave 1, 2 in Wave 2) | Strategy A maximizes competition but also information leakage. |
| Arrival Price (Mid) | 99.50 | 99.50 | The benchmark price at the moment the order is generated. |
| Average Quoted Spread (bps) | 12.5 bps | 8.0 bps | Wider auction signals risk, causing all dealers to build in a larger adverse selection premium. |
| Winning Execution Price | 99.42 | 99.45 | The targeted auction achieves a better execution price. |
| Slippage vs. Arrival (bps) | 8.0 bps | 5.0 bps | The cost of execution was 3 bps lower with the targeted strategy. |
| Monetary Slippage Cost | $40,000 | $25,000 | A direct cost savings of $15,000 on a single trade. |
| Information Leakage Score | High | Low | Qualitative assessment of market chatter and pre-hedging activity. |

![A precision metallic instrument with a black sphere rests on a multi-layered platform. This symbolizes institutional digital asset derivatives market microstructure, enabling high-fidelity execution and optimal price discovery across diverse liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-engine-component-digital-asset-derivatives-market-microstructure.jpg)

## References

- Bessembinder, Hendrik, Jia, Hao, and Spatt, Chester S. “Liquidity and Price Discovery in the US Corporate Bond Market.” The Journal of Finance, 2020.

- Bouchard, Bruno, and Lehalle, Charles-Albert. “Optimal Dealing with a Rogue Trader ▴ A Control-Theoretic Approach.” In Large Portfolio Management, Chapman and Hall/CRC, 2018.

- Di Maggio, Marco, Franzoni, Francesco, and Kermani, Amir. “The Importance of Beliefs in Bidding and Price Discovery.” The Review of Financial Studies, 2019.

- Hollifield, Burton, Neklyudov, Artem, and Spatt, Chester S. “Price Discovery and the Cross-Section of High-Frequency Trading.” The Review of Financial Studies, 2017.

- O’Hara, Maureen. “Market Microstructure Theory.” Blackwell Publishing, 1995.

- Parlour, Christine A. and Seppi, Duane J. “Liquidity-Based Competition for Order Flow.” The Review of Financial Studies, 2003.

- Madhavan, Ananth. “Market Microstructure ▴ A Survey.” Journal of Financial Markets, 2000.

- Grossman, Sanford J. and Stiglitz, Joseph E. “On the Impossibility of Informationally Efficient Markets.” The American Economic Review, 1980.

- Lehalle, Charles-Albert, and Laruelle, Sophie. “Market Microstructure in Practice.” World Scientific Publishing, 2013.

- Foucault, Thierry, Pagano, Marco, and Röell, Ailsa. “Market Liquidity ▴ Theory, Evidence, and Policy.” Oxford University Press, 2013.

![A sleek, symmetrical digital asset derivatives component. It represents an RFQ engine for high-fidelity execution of multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-for-optimized-market-microstructure.jpg)

## Reflection

The mechanics of information asymmetry within the RFQ protocol are a microcosm of the broader challenge in institutional finance ▴ achieving execution certainty in an uncertain world. The data tables and strategic frameworks presented here provide a quantitative lens on the problem. Yet, the ultimate execution quality rests on the operational architecture a firm builds around these principles.

Viewing your execution protocol not as a static set of rules but as an adaptive system ▴ one that learns from every trade and refines its approach based on empirical data ▴ is the final and most critical step. The true strategic advantage lies in architecting an intelligent system where technology, process, and human expertise combine to transform informational disadvantages into a consistent, measurable edge.

![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](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-protocol-system-facilitating-high-fidelity-execution-price-discovery.jpg)

## Glossary

<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 modular, institutional-grade device with a central data aggregation interface and metallic spigot. This Prime RFQ represents a robust RFQ protocol engine, enabling high-fidelity execution for institutional digital asset derivatives, optimizing capital efficiency and best execution](https://options.greeks.live/wp-content/uploads/2025/08/principals-institutional-digital-asset-derivatives-prime-os-for-optimized-rfq-protocol-best-execution-system.jpg)

## Central Limit Order Book

Meaning ▴ A Central Limit Order Book (CLOB) is a foundational trading system architecture where all buy and sell orders for a specific crypto asset or derivative, like institutional options, are collected and displayed in real-time, organized by price and time priority. </a><a href="https://prime.greeks.live/area/market-impact/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, bi-component digital asset derivatives engine reveals its intricate core, symbolizing an advanced RFQ protocol. This Prime RFQ component enables high-fidelity execution and optimal price discovery within complex market microstructure, managing latent liquidity for institutional operations](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-optimal-execution.jpg)

## Market Impact

Meaning ▴ Market impact, in the context of crypto investing and institutional options trading, quantifies the adverse price movement caused by an investor's own trade execution. </a><a href="https://prime.greeks.live/area/information-asymmetry/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A stylized spherical system, symbolizing an institutional digital asset derivative, rests on a robust Prime RFQ base. Its dark core represents a deep liquidity pool for algorithmic trading](https://options.greeks.live/wp-content/uploads/2025/08/institutional-grade-rfq-protocol-engine-facilitating-best-execution-and-liquidity-aggregation-for-digital-asset-derivatives.jpg)

## Information Asymmetry

Meaning ▴ Information Asymmetry describes a fundamental condition in financial markets, including the nascent crypto ecosystem, where one party to a transaction possesses more or superior relevant information compared to the other party, creating an imbalance that can significantly influence pricing, execution, and strategic decision-making. </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">
![Precision-engineered metallic discs, interconnected by a central spindle, against a deep void, symbolize the core architecture of an Institutional Digital Asset Derivatives RFQ protocol. This setup facilitates private quotation, robust portfolio margin, and high-fidelity execution, optimizing market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-core-infrastructure.jpg)

## Adverse Selection

Meaning ▴ Adverse selection in the context of crypto RFQ and institutional options trading describes a market inefficiency where one party to a transaction possesses superior, private information, leading to the uninformed party accepting a less favorable price or assuming disproportionate risk. </a><a href="https://prime.greeks.live/area/price-discovery/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Reflective and translucent discs overlap, symbolizing an RFQ protocol bridging market microstructure with institutional digital asset derivatives. This depicts seamless price discovery and high-fidelity execution, accessing latent liquidity for optimal atomic settlement within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-digital-asset-derivatives-rfq-execution-best-price-discovery.jpg)

## Price Discovery

Meaning ▴ Price Discovery, within the context of crypto investing and market microstructure, describes the continuous process by which the equilibrium price of a digital asset is determined through the collective interaction of buyers and sellers across various trading venues. </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">
![Intersecting metallic components symbolize an institutional RFQ Protocol framework. This system enables High-Fidelity Execution and Atomic Settlement for Digital Asset Derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-system-specialists.jpg)

## Information Leakage

Meaning ▴ Information leakage, in the realm of crypto investing and institutional options trading, refers to the inadvertent or intentional disclosure of sensitive trading intent or order details to other market participants before or during trade execution. </a><a href="https://prime.greeks.live/area/client-tiering/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Intersecting angular structures symbolize dynamic market microstructure, multi-leg spread strategies. Translucent spheres represent institutional liquidity blocks, digital asset derivatives, precisely balanced](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-platform-4.jpg)

## Client Tiering

Meaning ▴ Client Tiering, in the domain of crypto investing and institutional trading, refers to the systematic classification of clients into distinct groups based on predetermined criteria. </a><a href="https://prime.greeks.live/area/adverse-selection-premium/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Precision-engineered abstract components depict institutional digital asset derivatives trading. A central sphere, symbolizing core asset price discovery, supports intersecting elements representing multi-leg spreads and aggregated inquiry](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-microstructure-optimization.jpg)

## Adverse Selection Premium

Meaning ▴ The Adverse Selection Premium denotes an incremental cost embedded within transaction pricing to account for informational disparities among market participants. </a><a href="https://prime.greeks.live/area/algorithmic-integration/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, dark sphere, symbolizing the Intelligence Layer of a Prime RFQ, rests on a sophisticated institutional grade platform. Its surface displays volatility surface data, hinting at quantitative analysis for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-platform-intelligence-layer-optimizing-high-fidelity-execution.jpg)

## Algorithmic Integration

Meaning ▴ In the context of crypto, Algorithmic Integration refers to the systematic process of combining disparate systems or platforms through automated, rules-based computational processes. </a><a href="https://prime.greeks.live/area/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Beige cylindrical structure, with a teal-green inner disc and dark central aperture. This signifies an institutional grade Principal OS module, a precise RFQ protocol gateway for high-fidelity execution and optimal liquidity aggregation of digital asset derivatives, critical for quantitative analysis and market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/principal-os-rfq-engine-for-digital-asset-derivatives-high-fidelity-execution-optimal-liquidity-aggregation.jpg)

## Transaction Cost Analysis

Meaning ▴ Transaction Cost Analysis (TCA), in the context of cryptocurrency trading, is the systematic process of quantifying and evaluating all explicit and implicit costs incurred during the execution of digital asset trades. </a><a href="https://prime.greeks.live/question/how-does-the-structure-of-an-illiquid-asset-itself-affect-the-adverse-selection-premium/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![An abstract composition featuring two intersecting, elongated objects, beige and teal, against a dark backdrop with a subtle grey circular element. This visualizes RFQ Price Discovery and High-Fidelity Execution for Multi-Leg Spread Block Trades within a Prime Brokerage Crypto Derivatives OS for Institutional Digital Asset Derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-options-rfq-for-multi-leg-spreads-price-discovery.jpg)

## Selection Premium

An illiquid asset's structure dictates its information opacity, directly scaling the adverse selection premium required to manage embedded knowledge gaps. </a><a href="https://prime.greeks.live/area/block-trade/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Sleek, intersecting planes, one teal, converge at a reflective central module. This visualizes an institutional digital asset derivatives Prime RFQ, enabling RFQ price discovery across liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-digital-asset-derivatives-rfq-engine-optimizing-institutional-liquidity-aggregation-and-best-execution.jpg)

## Block Trade

Meaning ▴ A Block Trade, within the context of crypto investing and institutional options trading, denotes a large-volume transaction of digital assets or their derivatives that is negotiated and executed privately, typically outside of a public order book. </a>

**Tags:** [Information Asymmetry](https://options.greeks.live/area/information-asymmetry/), [Transaction Cost Analysis](https://options.greeks.live/area/transaction-cost-analysis/), [Winner's Curse](https://options.greeks.live/area/winners-curse/), [Price Discovery Protocol](https://options.greeks.live/area/price-discovery-protocol/), [Market Microstructure](https://options.greeks.live/area/market-microstructure/), [Client Tiering](https://options.greeks.live/area/client-tiering/)	

## Discover More

- 
### [For Complex Derivatives, Why Is an RFQ Protocol Often the Superior Choice?](https://options.greeks.live/question/for-complex-derivatives-why-is-an-rfq-protocol-often-the-superior-choice/)
![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)

An RFQ protocol offers superior execution for complex derivatives by replacing public information leakage with discreet, competitive price discovery.

- 
### [What Are the Primary Differences in Information Risk between an Rfq and a Central Limit Order Book?](https://options.greeks.live/question/what-are-the-primary-differences-in-information-risk-between-an-rfq-and-a-central-limit-order-book/)
![A gleaming, translucent sphere with intricate internal mechanisms, flanked by precision metallic probes, symbolizes a sophisticated Principal's RFQ engine. This represents the atomic settlement of multi-leg spread strategies, enabling high-fidelity execution and robust price discovery within institutional digital asset derivatives markets, minimizing latency and slippage for optimal alpha generation and capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/inst-digital-asset-deriv-rfq-os-for-optimal-high-fidelity-trade-exec.jpg)

The primary information risk difference is CLOBs expose trade intent publicly, while RFQs risk leakage to select counterparties.

- 
### [What Are the Primary Differences between RFQ and a Central Limit Order Book for Block Trades?](https://options.greeks.live/question/what-are-the-primary-differences-between-rfq-and-a-central-limit-order-book-for-block-trades/)
![A sleek, multi-layered institutional crypto derivatives platform interface, featuring a transparent intelligence layer for real-time market microstructure analysis. Buttons signify RFQ protocol initiation for block trades, enabling high-fidelity execution and optimal price discovery within a robust Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-crypto-derivatives-os-precision-execution-rfq-protocol-intelligence-layer.jpg)

RFQ is a discreet negotiation protocol for execution certainty; CLOB is a transparent auction for anonymous price discovery.

- 
### [For Large or Illiquid Trades Which System Presents a Better Overall Risk Profile?](https://options.greeks.live/question/for-large-or-illiquid-trades-which-system-presents-a-better-overall-risk-profile/)
![Abstract image showing interlocking metallic and translucent blue components, suggestive of a sophisticated RFQ engine. This depicts the precision of an institutional-grade Crypto Derivatives OS, facilitating high-fidelity execution and optimal price discovery within complex market microstructure for multi-leg spreads and atomic settlement.](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-market-microstructure-for-institutional-digital-asset-derivatives-rfq.jpg)

For large or illiquid trades, RFQ systems offer a superior risk profile by providing execution certainty and controlling information leakage.

- 
### [What Is the Relationship between Information Leakage and the Winner’s Curse in RFQ Auctions?](https://options.greeks.live/question/what-is-the-relationship-between-information-leakage-and-the-winners-curse-in-rfq-auctions/)
![Institutional-grade infrastructure supports a translucent circular interface, displaying real-time market microstructure for digital asset derivatives price discovery. Geometric forms symbolize precise RFQ protocol execution, enabling high-fidelity multi-leg spread trading, optimizing capital efficiency and mitigating systemic risk.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-request-for-quote-protocol-high-fidelity-execution-market-microstructure-intelligence-layer.jpg)

Information leakage in RFQ auctions directly causes the winner's curse by arming losing bidders with intelligence to trade against the winner.

- 
### [How Does Adverse Selection Manifest Differently in a CLOB versus an RFQ System?](https://options.greeks.live/question/how-does-adverse-selection-manifest-differently-in-a-clob-versus-an-rfq-system/)
![A sleek conduit, embodying an RFQ protocol and smart order routing, connects two distinct, semi-spherical liquidity pools. Its transparent core signifies an intelligence layer for algorithmic trading and high-fidelity execution of digital asset derivatives, ensuring atomic settlement.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-execution-engine-bridging-diverse-liquidity-pools-via-high-fidelity-rfq-protocol-orchestration.jpg)

Adverse selection in a CLOB is a high-speed public race against information; in an RFQ, it's a private strategic negotiation of it.

- 
### [What Are the Primary Systemic Differences between RFQ and a Central Limit Order Book?](https://options.greeks.live/question/what-are-the-primary-systemic-differences-between-rfq-and-a-central-limit-order-book/)
![A golden rod, symbolizing RFQ initiation, converges with a teal crystalline matching engine atop a liquidity pool sphere. This illustrates high-fidelity execution within market microstructure, facilitating price discovery for multi-leg spread strategies on a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-systemic-core.jpg)

A Central Limit Order Book is a transparent, all-to-all matching engine, while an RFQ is a discreet, bilateral protocol for targeted liquidity.

- 
### [How Does Adverse Selection Risk Differ between CLOB and RFQ Protocols?](https://options.greeks.live/question/how-does-adverse-selection-risk-differ-between-clob-and-rfq-protocols/)
![A sophisticated modular component of a Crypto Derivatives OS, featuring an intelligence layer for real-time market microstructure analysis. Its precision engineering facilitates high-fidelity execution of digital asset derivatives via RFQ protocols, ensuring optimal price discovery and capital efficiency for institutional participants.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-module.jpg)

Adverse selection risk in a CLOB arises from anonymous information leakage to all, while in an RFQ it stems from controlled leakage to a few.

- 
### [When Is a Single-Dealer RFQ Strategically Preferable to a Multi-Dealer Platform for Large Block Trades?](https://options.greeks.live/question/when-is-a-single-dealer-rfq-strategically-preferable-to-a-multi-dealer-platform-for-large-block-trades/)
![A sleek, institutional-grade Crypto Derivatives OS with an integrated intelligence layer supports a precise RFQ protocol. Two balanced spheres represent principal liquidity units undergoing high-fidelity execution, optimizing capital efficiency within market microstructure for best execution.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-platform-3.jpg)

A single-dealer RFQ is preferable for large, sensitive trades where minimizing information leakage is the paramount strategic objective.

---

## Raw Schema Data

```json
{
    "@context": "https://schema.org",
    "@type": "BreadcrumbList",
    "itemListElement": [
        {
            "@type": "ListItem",
            "position": 1,
            "name": "Home",
            "item": "https://options.greeks.live"
        },
        {
            "@type": "ListItem",
            "position": 2,
            "name": "Question",
            "item": "https://options.greeks.live/question/"
        },
        {
            "@type": "ListItem",
            "position": 3,
            "name": "How Does Information Asymmetry between Dealers and Clients Impact RFQ Pricing?",
            "item": "https://options.greeks.live/question/how-does-information-asymmetry-between-dealers-and-clients-impact-rfq-pricing/"
        }
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "Organization",
    "@id": "https://greeks.live/#organization",
    "name": "Greeks.Live",
    "url": "https://greeks.live/",
    "description": "Greeks.live is the definitive toolkit for the professional options trader, dedicated to empowering our users with institutional-grade data, advanced analytics, and a comprehensive suite of trading tools designed to provide a decisive edge in the market. Every article and guide published under the Greeks.live name is a product of our deep commitment to data-driven analysis and our mission to support the global trading community.",
    "email": "support@greeks.live",
    "logo": {
        "@type": "ImageObject",
        "url": "https://options.greeks.live/wp-content/uploads/2025/07/Greeks.Live-Logo-Icon.svg"
    },
    "hasPart": [
        {
            "@type": "WebSite",
            "name": "About Us",
            "url": "https://about.greeks.live"
        },
        {
            "@type": "WebSite",
            "name": "App Download Page",
            "url": "https://about.greeks.live/#/download/basic_trade"
        },
        {
            "@type": "WebSite",
            "name": "Newcomers' Guide",
            "url": "https://twisty-sign-c8b.notion.site/Guide-for-Greeks-live-X-Deribit-Newbies-5a08a3052822427d800af6eaf3704c8d"
        },
        {
            "@type": "WebSite",
            "name": "Knowledge Base",
            "url": "https://linktr.ee/greeks.live"
        },
        {
            "@type": "WebSite",
            "name": "Option Terminology",
            "url": "https://greekslive.notion.site/88dfc00e7c584d4d8969b6302a79a12f?pvs=4"
        },
        {
            "@type": "WebSite",
            "name": "Terms of Service",
            "url": "https://greeks.live/#/tos"
        },
        {
            "@type": "WebSite",
            "name": "Disclaimer",
            "url": "https://greeks.live/#/disclaimer"
        }
    ],
    "sameAs": [
        "https://x.com/greekslive",
        "https://youtube.com/@greeks_live?si=-KjT0Lkw4WUCI0tD",
        "https://t.me/greekslive_notifications",
        "https://t.me/greekslive",
        "https://pinterest.com/greekslive/"
    ],
    "makesOffer": [
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "RFQ Platform",
                "url": "https://rfq.greeks.live",
                "description": "Execute institutional-grade block trades for crypto options and futures. This platform provides deep, over-the-counter (OTC) liquidity via a professional Request for Quote system.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Lending Tools",
                "url": "https://lend.greeks.live",
                "description": "Manage crypto lending and borrowing activities to earn yield or secure loans. This suite of tools helps users analyze interest rates and manage collateralized debt positions.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Data Lab",
                "url": "https://greeks.live/#/deribit/tools/datalab/BTC",
                "description": "Analyze historical and real-time options data with advanced metrics. This tool is designed for backtesting strategies and identifying market trends through comprehensive data visualization.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Profit & Loss Analysis (PnL)",
                "url": "https://greeks.live/#/deribit/tools/pnl_analysis",
                "description": "Track and analyze the Profit and Loss (PnL) of your options portfolio. This tool provides detailed performance metrics to help traders evaluate and refine their strategies.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Position Visualization",
                "url": "https://greeks.live/#/deribit/tools/pv/BTC",
                "description": "Visualize complex options positions and their corresponding risk profiles. This tool generates payoff diagrams to help traders intuitively understand potential profit, loss, and exposure.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Options Calculator",
                "url": "https://greeks.live/#/deribit/tools/calculator",
                "description": "Calculate the theoretical price and risk parameters ('the Greeks') of crypto options. An essential tool for pricing new trades and analyzing the sensitivity of existing positions.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live Main Platform",
                "url": "https://greeks.live/",
                "description": "The central hub for the Greeks.live suite of professional cryptocurrency options and derivatives trading tools. Access analytics, manage positions, and explore the ecosystem.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Community Forum",
                "url": "https://t.greeks.live",
                "description": "Join the official Greeks.live community. Connect with other traders, share insights, and receive the latest updates directly from the team.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live for Deribit",
                "url": "http://deribit.greeks.live",
                "description": "A dedicated interface for trading on the Deribit exchange. This platform leverages Greeks.live's advanced analytics and tools specifically for users of Deribit's options and futures markets.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live for OKX",
                "url": "http://okx.greeks.live",
                "description": "A dedicated interface for trading on the OKX exchange. This platform integrates Greeks.live's powerful analytics with the OKX marketplace, focusing on its options and derivatives products.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "GLVS.AI Trading Platform",
                "url": "https://www.glvs.ai/",
                "description": "An AI-powered platform for automated crypto options trading. Leverage advanced algorithms and data-driven signals to develop and deploy sophisticated, hands-free trading strategies.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "API Testnet & Sandbox",
                "url": "https://test.greeks.live",
                "description": "A dedicated testnet environment for developers to test their API integrations and automated trading strategies. This sandbox allows for full functionality testing without risking real funds.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        }
    ],
    "subOrganization": [
        {
            "@type": "Organization",
            "name": "GreeksLive HK Co., Limited",
            "email": "support@greeks.live",
            "telephone": "+852-56418949",
            "address": {
                "@type": "PostalAddress",
                "streetAddress": "Unit 11, 27/F, K. Wah Centre, 191 Java Road",
                "addressLocality": "Hong Kong",
                "addressRegion": "North Point",
                "addressCountry": "CN",
                "postalCode": "0000"
            },
            "geo": {
                "@type": "GeoCoordinates",
                "latitude": "22.2932357",
                "longitude": "114.2022026"
            },
            "image": "https://options.greeks.live/wp-content/uploads/2025/08/Wah-Centre-Hong-Kong.jpg"
        }
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "Article",
    "mainEntityOfPage": {
        "@type": "WebPage",
        "@id": "https://options.greeks.live/question/how-does-information-asymmetry-between-dealers-and-clients-impact-rfq-pricing/"
    },
    "headline": "How Does Information Asymmetry between Dealers and Clients Impact RFQ Pricing? \u25b4 Question",
    "description": "Information asymmetry structurally inflates RFQ prices by forcing dealers to embed an adverse selection premium to counter client knowledge. \u25b4 Question",
    "url": "https://options.greeks.live/question/how-does-information-asymmetry-between-dealers-and-clients-impact-rfq-pricing/",
    "datePublished": "2025-08-05T16:25:23+00:00",
    "dateModified": "2025-10-26T05:18:19+00:00",
    "articleSection": [
        "Question"
    ],
    "author": {
        "@id": "https://greeks.live/#organization"
    },
    "publisher": {
        "@id": "https://greeks.live/#organization"
    },
    "image": {
        "@type": "ImageObject",
        "url": "https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-framework-for-optimal-market-microstructure-and-capital-efficiency.jpg",
        "caption": "An intricate network of translucent planes and glowing conduits illustrates an advanced institutional digital asset derivatives trading ecosystem. It optimizes high-fidelity execution via a robust RFQ protocol, enabling efficient price discovery and atomic settlement across diverse liquidity pools. This system minimizes slippage and counterparty risk for prime brokerage clients, embodying the Prime RFQ intelligence layer for multi-leg spreads and portfolio margin."
    },
    "keywords": [
        "Adverse Selection",
        "Adverse Selection Premium",
        "Algorithmic Integration",
        "Block Trade",
        "Block Trade Execution",
        "Central Limit Order Book",
        "Client Tiering",
        "Dealer Pricing Engine",
        "Illiquid Assets",
        "Information Asymmetry",
        "Information Leakage",
        "Market Impact",
        "Market Microstructure",
        "Off-Book Liquidity",
        "Price Discovery",
        "Price Discovery Protocol",
        "RFQ Winner's Curse",
        "Transaction Cost Analysis",
        "Winner's Curse"
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "WebSite",
    "url": "https://options.greeks.live/",
    "potentialAction": {
        "@type": "SearchAction",
        "target": "https://options.greeks.live/?s=search_term_string",
        "query-input": "required name=search_term_string"
    }
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "FAQPage",
    "mainEntity": [
        {
            "@type": "Question",
            "name": "What Is The Optimal Number Of Dealers To Query?",
            "acceptedAnswer": {
                "@type": "Answer",
                "text": "There is a distinct trade-off between the competitive benefits of adding another dealer to an auction and the information leakage costs. Each additional dealer increases the probability of finding the single best price at that moment. However, it also increases the number of market participants who know a large trade is being shopped, raising the risk of pre-hedging and market movement against the client. The optimal number is a function of the asset's liquidity, the trade's size relative to average daily volume, and the client's historical relationship with the dealer panel. Post-trade Transaction Cost Analysis (TCA) is vital for refining this process over time."
            }
        },
        {
            "@type": "Question",
            "name": "How Does Technology Mitigate Information Risk?",
            "acceptedAnswer": {
                "@type": "Answer",
                "text": "Modern execution platforms are designed to manage the flow of information. Features like anonymous RFQs, where the client's identity is shielded from the dealer until after the trade is complete, can help neutralize the dealer's ability to price based on past client behavior. Similarly, platforms that aggregate data and provide pre-trade price estimates can give clients a more accurate benchmark, reducing their reliance on the dealers' quotes alone and helping them spot outliers more effectively. Machine learning models are increasingly used to provide these reference prices, especially in fragmented markets like corporate bonds. "
            }
        }
    ]
}
```


---

**Original URL:** https://options.greeks.live/question/how-does-information-asymmetry-between-dealers-and-clients-impact-rfq-pricing/
