How Does MiFID II's Firm Quote Obligation Impact Bid-Offer Spreads across Asset Classes? ▴ Question

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Precision-engineered modular components, with transparent elements and metallic conduits, depict a robust RFQ Protocol engine. This architecture facilitates high-fidelity execution for institutional digital asset derivatives, enabling efficient liquidity aggregation and atomic settlement within market microstructure

References

Miloș, Marius Cristian, Laura Raisa Miloș, Flavia Barna, and Claudiu Boțoc. “Impact of MiFID II on Romanian Stock Market Liquidity ▴ Comparative Analysis with a Developed Stock Market.” International Journal of Financial Studies 9, no. 4 (2021) ▴ 69.
Anselmi, Giulio, and Giovanni Petrella. “Regulation and stock market quality ▴ The impact of MiFID II provision on research unbundling.” International Review of Financial Analysis 76 (2021) ▴ 101788.
Gomber, Peter, Benjamin Clapham, Jens Lausen, and Sven Panz. “The Impact of MiFID II/MiFIR on European Market Structure ▴ A Survey among Market Experts.” The Journal of Trading 13, no. 2 (2018) ▴ 35-46.
Fang, Bingxu, Ole-Kristian Hope, Zhongwei Huang, and Rucsandra Moldovan. “The effects of MiFID II on sell-side analysts, buy-side analysts, and firms.” Review of Accounting Studies 25 (2020) ▴ 855 ▴ 902.
Utkilen, Henriette, and Synne Wakeford-Wesmann. “Liquidity Following MiFID II. Estimating the Effect of Research Unbundling on Norwegian Small- and Mid-Cap Stocks.” Master’s thesis, Norwegian School of Economics, Bergen, 2019.
Corwin, Shane A. and Paul Schultz. “A simple way to estimate bid-ask spreads from daily high and low prices.” The Journal of Finance 67, no. 2 (2012) ▴ 719-760.
Gresse, Carole. “Post-MiFID Developments in Equity Market Liquidity.” European Finance Review, 1970.

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A transparent cylinder containing a white sphere floats between two curved structures, each featuring a glowing teal line. This depicts institutional-grade RFQ protocols driving high-fidelity execution of digital asset derivatives, facilitating private quotation and liquidity aggregation through a Prime RFQ for optimal block trade atomic settlement

Reflection

The dynamic interplay between regulatory mandates and market microstructure consistently reshapes the operational imperative for institutional participants. Understanding the systemic implications of obligations, such as MiFID II’s firm quote rule, transcends mere compliance; it becomes a strategic advantage. Each regulatory adjustment acts as a catalyst, compelling a re-evaluation of existing frameworks and a renewed pursuit of execution precision.

The ultimate measure of an operational framework’s sophistication lies in its capacity for adaptive intelligence, translating regulatory constraints into pathways for enhanced capital efficiency and superior trading outcomes. This ongoing evolution demands continuous vigilance and an unwavering commitment to refining the very systems that govern market interaction.