# What Are the Primary Due Diligence Requirements for Onboarding a New Systematic Internaliser Counterparty? ▴ Question

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

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![A sophisticated digital asset derivatives RFQ engine's core components are depicted, showcasing precise market microstructure for optimal price discovery. Its central hub facilitates algorithmic trading, ensuring high-fidelity execution across multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-optimizing-multi-leg-spreads-for-optimal-capital-efficiency.jpg)

![Abstract geometric structure with sharp angles and translucent planes, symbolizing institutional digital asset derivatives market microstructure. The central point signifies a core RFQ protocol engine, enabling precise price discovery and liquidity aggregation for multi-leg options strategies, crucial for high-fidelity execution and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/principals-operational-framework-optimizing-institutional-digital-asset-derivatives-rfq-protocol-execution-for-alpha-generation.jpg)

## Concept

The decision to connect with a new [Systematic Internaliser](https://prime.greeks.live/area/systematic-internaliser/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (SI) is a deep commitment to a specific liquidity architecture. It represents a calculated choice to engage with a counterparty that operates under a distinct regulatory and functional mandate, [executing client orders](https://prime.greeks.live/question/what-are-the-primary-inventory-risks-an-si-faces-when-executing-large-client-orders-in-bonds/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) against its own principal book. Understanding this mechanism is the foundational requirement before any due diligence checklist is even contemplated. An SI is an investment firm that, on an organised, frequent, systematic, and substantial basis, deals on its own account by executing client orders outside a traditional trading venue.

This structure presents a unique source of liquidity, one that is proprietary and curated by the SI itself. The primary [due diligence process](https://prime.greeks.live/area/due-diligence-process/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), therefore, begins with a conceptual grasp of this reality. You are not merely connecting to another execution venue; you are establishing a direct, bilateral relationship with a principal risk taker.

This relationship’s architecture is governed by the Markets in Financial Instruments Directive II ([MiFID II](https://prime.greeks.live/area/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)), which extended the SI regime beyond equities to a wider array of financial instruments, including bonds and derivatives. The directive’s purpose was to enhance transparency in markets by subjecting these major liquidity providers to pre-trade transparency obligations similar to those of regulated markets. For the onboarding firm, this means the SI is obligated to provide firm quotes, creating a more structured and transparent form of off-exchange trading. The initial phase of [due diligence](https://prime.greeks.live/area/due-diligence/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is an appraisal of this very structure.

It requires an analysis of how this specific form of bilateral, principal-based liquidity will integrate with the firm’s existing execution protocols and [best execution](https://prime.greeks.live/area/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) mandate. The core question is not “Can we connect?” but “How does this specific principal’s liquidity profile and operational framework enhance our own system for achieving optimal client outcomes?”

> The initial due diligence phase is a strategic assessment of how a Systematic Internaliser’s principal-based liquidity model integrates into and enhances a firm’s existing execution architecture.

The functional reality of an SI is that it is a curated liquidity pool. The prices quoted are not passive reflections of a central limit order book; they are active expressions of the SI’s own [risk appetite](https://prime.greeks.live/area/risk-appetite/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and inventory. This has profound implications for the due [diligence process](https://prime.greeks.live/question/how-does-operational-due-diligence-differ-from-financial-due-diligence/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). It must extend beyond a simple check of regulatory status.

It must become an investigation into the SI’s market-making philosophy, its sources of liquidity, and its behavior under various market conditions. A firm must ascertain how the SI manages its own risk, as this will directly influence the quality and reliability of the liquidity it provides. The process is an exercise in systems thinking, mapping the flow of information and risk between the firm’s execution management system (EMS) and the SI’s proprietary trading engine. This initial conceptual framing shapes every subsequent stage of due diligence, from technical connectivity to legal agreements, ensuring that the entire process is aligned with the strategic goal of sourcing superior liquidity, not just adding another counterparty.

![A central hub with four radiating arms embodies an RFQ protocol for high-fidelity execution of multi-leg spread strategies. A teal sphere signifies deep liquidity for underlying assets](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-engine-for-optimal-multi-leg-spreads.jpg)

![Stacked, distinct components, subtly tilted, symbolize the multi-tiered institutional digital asset derivatives architecture. Layers represent RFQ protocols, private quotation aggregation, core liquidity pools, and atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/layered-institutional-digital-asset-derivatives-rfq-protocols-optimizing-principal-execution-management-systems-for-best-execution.jpg)

## Strategy

A robust strategy for onboarding a Systematic Internaliser moves beyond rote compliance to a sophisticated, multi-layered risk and performance assessment. The objective is to construct a comprehensive framework that evaluates a potential SI counterparty across several critical vectors ▴ [financial stability](https://prime.greeks.live/area/financial-stability/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), [operational resilience](https://prime.greeks.live/question/how-does-the-cover-2-standard-enhance-the-resilience-of-a-central-counterparty/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), execution quality, and regulatory alignment. This framework serves as the strategic filter through which all potential SIs are vetted, ensuring that any new relationship is a net positive for the firm’s execution capabilities and overall risk posture. The development of this strategy is the second tier of the due diligence process, translating conceptual understanding into a concrete plan of action.

![A stacked, multi-colored modular system representing an institutional digital asset derivatives platform. The top unit facilitates RFQ protocol initiation and dynamic price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-engine-15.jpg)

## What Is the Core of a Counterparty Risk Framework?

At the heart of the onboarding strategy lies the [counterparty risk framework](https://prime.greeks.live/area/counterparty-risk-framework/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). This is a structured methodology for quantifying and qualifying the risks associated with entering into a bilateral trading relationship. The framework must be dynamic, allowing for the [ongoing monitoring](https://prime.greeks.live/area/ongoing-monitoring/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) of the SI long after the initial onboarding is complete. It is a system designed to protect the firm from financial, operational, or reputational damage resulting from a counterparty failure.

The framework is built upon several pillars of analysis. Each pillar represents a distinct domain of risk that must be thoroughly investigated. The output of this analysis should be a clear, data-driven assessment that informs the final decision to onboard.

- 
**[Financial Stability Analysis](https://prime.greeks.live/area/financial-stability-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)** This involves a deep dive into the SI’s [financial health](https://prime.greeks.live/question/how-does-the-rise-of-systematic-internalisers-affect-the-overall-health-of-price-discovery-in-equity-markets/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). The analysis should scrutinize balance sheets, income statements, and cash flow statements. Key metrics include capital adequacy ratios, leverage ratios, and liquidity coverage ratios. The goal is to assess the SI’s ability to withstand market shocks and meet its financial obligations.

- 
**Operational Resilience Assessment** This pillar focuses on the SI’s technological and operational infrastructure. It includes a review of the firm’s trading systems, data security protocols, and business continuity plans. The assessment must verify that the SI can provide reliable, uninterrupted service and protect sensitive client data.

- 
**[Execution Quality](https://prime.greeks.live/area/execution-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and Market Impact Analysis** This is a quantitative assessment of the SI’s performance as a liquidity provider. It involves analyzing historical trade data to measure execution quality against various benchmarks. Key metrics include price improvement, effective spread, fill rates, and adverse selection. The analysis seeks to understand how the SI’s pricing and liquidity provision will impact the firm’s trading costs and information leakage.

![Stacked, multi-colored discs symbolize an institutional RFQ Protocol's layered architecture for Digital Asset Derivatives. This embodies a Prime RFQ enabling high-fidelity execution across diverse liquidity pools, optimizing multi-leg spread trading and capital efficiency within complex market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-stack-for-high-fidelity-execution.jpg)

## Developing a Comparative Analysis Model

To operationalize the [risk framework](https://prime.greeks.live/area/risk-framework/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), a [comparative analysis model](https://prime.greeks.live/guide/a-comparative-analysis-of-crypto-derivatives-platforms/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is an indispensable tool. This model allows the firm to score and rank potential SI counterparties based on a consistent set of criteria. The model should be tailored to the firm’s specific needs and risk appetite, with weightings assigned to different criteria based on their perceived importance. This systematic approach ensures that the selection process is objective and aligned with the firm’s strategic priorities.

The following table provides an illustrative example of a [comparative analysis](https://prime.greeks.live/guide/a-comparative-analysis-of-crypto-derivatives-platforms/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) model for evaluating two hypothetical SI counterparties. The scores are based on a scale of 1 to 5, with 5 being the highest rating.

| Diligence Criterion | Systematic Internaliser A | Systematic Internaliser B | Weighting | Weighted Score A | Weighted Score B |
| --- | --- | --- | --- | --- | --- |
| Financial Stability (Credit Rating, Capital Ratios) | 4 | 3 | 30% | 1.2 | 0.9 |
| Operational Resilience (System Uptime, DR Plan) | 5 | 4 | 25% | 1.25 | 1.0 |
| Asset Class Coverage (Equities, Bonds, FX) | 3 | 5 | 20% | 0.6 | 1.0 |
| Execution Quality (Price Improvement, Fill Rate) | 4 | 4 | 15% | 0.6 | 0.6 |
| Technological Integration (FIX Protocol, API) | 5 | 3 | 10% | 0.5 | 0.3 |
| Total Score | – | – | 100% | 4.15 | 3.80 |

> A successful onboarding strategy relies on a dynamic, multi-faceted risk framework that systematically evaluates counterparties across financial, operational, and performance-based criteria.

![A transparent blue sphere, symbolizing precise Price Discovery and Implied Volatility, is central to a layered Principal's Operational Framework. This structure facilitates High-Fidelity Execution and RFQ Protocol processing across diverse Aggregated Liquidity Pools, revealing the intricate Market Microstructure of Institutional Digital Asset Derivatives](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-execution-system-microstructure-principal-framework.jpg)

## Integrating with Best Execution Obligations

A critical component of the strategy is ensuring that the onboarding of a new SI aligns with the firm’s overarching [best execution obligations](https://prime.greeks.live/area/best-execution-obligations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) [under MiFID](https://prime.greeks.live/question/what-are-the-operational-consequences-of-misreporting-under-mifid-ii-versus-a-reporting-failure-under-emir/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) II. This requires a documented process for how the SI will be incorporated into the firm’s order routing logic and execution policy. The firm must be able to demonstrate that the inclusion of the SI is reasonably expected to lead to better outcomes for clients.

This involves defining the specific scenarios in which flow will be directed to the SI. For example, the SI might be prioritized for certain order types, sizes, or asset classes where it has demonstrated a consistent ability to provide superior liquidity or pricing. The firm’s best execution committee should review and approve the strategy for incorporating the SI, and the decision should be documented with a clear rationale. The ongoing monitoring of the SI’s execution quality is also a crucial part of this process, with regular reviews to ensure that it continues to contribute positively to the firm’s best execution performance.

![An abstract geometric composition depicting the core Prime RFQ for institutional digital asset derivatives. Diverse shapes symbolize aggregated liquidity pools and varied market microstructure, while a central glowing ring signifies precise RFQ protocol execution and atomic settlement across multi-leg spreads, ensuring capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-architecture.jpg)

![Geometric shapes symbolize an institutional digital asset derivatives trading ecosystem. A pyramid denotes foundational quantitative analysis and the Principal's operational framework](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-execution-system-microstructure.jpg)

## Execution

The [execution phase](https://prime.greeks.live/question/what-are-the-primary-risks-associated-with-information-leakage-during-the-shopping-phase-of-a-block-trade/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) of onboarding a Systematic Internaliser is where strategic theory is translated into operational reality. This is a meticulous, multi-stage process that requires the coordinated effort of legal, compliance, operations, and technology teams. It is a project with zero tolerance for error, as any failure can result in regulatory sanction, financial loss, or reputational damage. The execution is governed by a detailed [operational playbook](https://prime.greeks.live/guide/the-institutional-playbook-for-rfq-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) that breaks down the onboarding process into a series of discrete, manageable tasks, each with its own set of procedures and controls.

![A sophisticated proprietary system module featuring precision-engineered components, symbolizing an institutional-grade Prime RFQ for digital asset derivatives. Its intricate design represents market microstructure analysis, RFQ protocol integration, and high-fidelity execution capabilities, optimizing liquidity aggregation and price discovery for block trades within a multi-leg spread environment](https://options.greeks.live/wp-content/uploads/2025/07/institutional-grade-proprietary-architecture-driving-high-fidelity-digital-asset-derivatives-execution-via-rfq-protocols-and-optimized-market-microstructure-dynamics.jpg)

## The Operational Playbook a Step by Step Guide

The operational playbook is the master document that guides the entire execution phase. It provides a granular, step-by-step checklist of all the activities that must be completed to bring a new SI online. The playbook is typically divided into several distinct phases, from initial due diligence to post-live monitoring.

![Central, interlocked mechanical structures symbolize a sophisticated Crypto Derivatives OS driving institutional RFQ protocol. Surrounding blades represent diverse liquidity pools and multi-leg spread components](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-architecture-optimizing-high-fidelity-execution-across-diverse-liquidity-pools.jpg)

## Phase 1 Initial Due Diligence and Information Gathering

This phase involves the collection and review of all necessary documentation from the potential SI counterparty. The objective is to build a comprehensive profile of the firm and perform a preliminary assessment of its suitability.

- 
**Documentation Request** A formal request is sent to the SI for a comprehensive package of due diligence materials. This includes constitutional documents, financial statements, regulatory licenses, compliance manuals, and details of their operational and technological infrastructure.

- 
**Know Your Counterparty (KYC) and Anti-Money Laundering (AML) Checks** A thorough KYC and AML check is performed to verify the identity of the counterparty and assess its risk profile. This includes screening against sanctions lists and checking for adverse media. The requirement for a Legal Entity Identifier (LEI) is fundamental for all counterparties under MiFID II.

- 
**Preliminary Risk Assessment** A high-level review of the collected documents is conducted to identify any immediate red flags. This assessment covers financial stability, regulatory standing, and operational capabilities.

![Stacked precision-engineered circular components, varying in size and color, rest on a cylindrical base. This modular assembly symbolizes a robust Crypto Derivatives OS architecture, enabling high-fidelity execution for institutional RFQ protocols](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-protocol-architecture-optimized-for-high-fidelity-execution.jpg)

## Phase 2 Deep Dive Departmental Reviews

In this phase, the detailed analysis of the SI is carried out by the relevant internal teams. Each team performs a specialized review based on its area of expertise.

- 
**Legal and Compliance Review** The legal team reviews all agreements, including the master trading agreement and the FIX connectivity agreement. The compliance team assesses the SI’s regulatory status, its adherence to MiFID II requirements, and its internal policies and procedures. This includes verifying their product governance and distribution strategies.

- 
**Credit Risk Review** The credit risk team performs a detailed financial analysis of the SI. This involves stress testing their balance sheet, analyzing their funding sources, and assigning an internal [credit rating](https://prime.greeks.live/question/how-does-credit-rating-directly-impact-illiquid-bond-tca-calculations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). The objective is to quantify the potential financial loss in the event of a counterparty default.

- 
**Operational and Technology Review** The operations and technology teams conduct a thorough review of the SI’s operational and technical capabilities. This includes an assessment of their trade processing workflow, settlement procedures, and disaster recovery plans. A key part of this review is the analysis of their [FIX protocol](https://prime.greeks.live/area/fix-protocol/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) specification and connectivity options.

![An abstract, multi-component digital infrastructure with a central lens and circuit patterns, embodying an Institutional Digital Asset Derivatives platform. This Prime RFQ enables High-Fidelity Execution via RFQ Protocol, optimizing Market Microstructure for Algorithmic Trading, Price Discovery, and Multi-Leg Spread](https://options.greeks.live/wp-content/uploads/2025/08/institutional-grade-digital-asset-derivatives-trading-platform-powering-high-fidelity-execution-via-advanced-rfq-protocol-prime-os-intelligence-layer.jpg)

## Quantitative Modeling and Data Analysis

A cornerstone of the execution phase is the quantitative analysis of the SI’s potential performance. This involves using data-driven models to forecast execution quality and to establish a baseline for ongoing monitoring. This analysis must be rigorous and objective, providing a clear-eyed view of the expected costs and benefits of the relationship.

![An institutional-grade platform's RFQ protocol interface, with a price discovery engine and precision guides, enables high-fidelity execution for digital asset derivatives. Integrated controls optimize market microstructure and liquidity aggregation within a Principal's operational framework](https://options.greeks.live/wp-content/uploads/2025/07/proprietary-institutional-digital-asset-derivatives-rfq-protocol-engine-facilitating-high-fidelity-execution-and-granular-market-microstructure-analysis-for-prime-os.jpg)

## Counterparty Financial Health Scorecard

A quantitative scorecard is used to distill the complex financial data of the SI into a single, easily understandable risk rating. This model combines various financial metrics, each with a specific weighting, to produce a composite score. This score provides a standardized measure of financial health that can be used to compare different counterparties and to track the SI’s financial stability over time.

| Financial Metric | Data Point | Weighting | Score (1-10) | Weighted Score |
| --- | --- | --- | --- | --- |
| Common Equity Tier 1 (CET1) Ratio | 14.5% | 25% | 8 | 2.0 |
| Leverage Ratio | 5.2% | 20% | 7 | 1.4 |
| Liquidity Coverage Ratio (LCR) | 130% | 20% | 9 | 1.8 |
| 5-Year Credit Default Swap (CDS) Spread | 75 bps | 15% | 6 | 0.9 |
| External Credit Rating (S&P, Moody’s) | A+ | 20% | 8 | 1.6 |
| Total Composite Score | – | 100% | – | 7.7 |

![Glossy, intersecting forms in beige, blue, and teal embody RFQ protocol efficiency, atomic settlement, and aggregated liquidity for institutional digital asset derivatives. The sleek design reflects high-fidelity execution, prime brokerage capabilities, and optimized order book dynamics for capital efficiency](https://options.greeks.live/wp-content/uploads/2025/08/precision-engineered-digital-asset-derivatives-execution-via-optimized-rfq-protocols-enhancing-principal-operational-frameworks.jpg)

## Phase 3 Integration and Testing

Once the deep-dive reviews are complete and the SI has been approved, the technical integration and testing phase begins. This is a critical phase that ensures the seamless and secure flow of orders and executions between the firm and the SI.

- 
**Connectivity Establishment** A secure network connection is established between the firm and the SI. This can be a dedicated line, a VPN connection, or a connection through a third-party network provider.

- 
**FIX Session Certification** The firm’s technology team works with the SI to certify the FIX protocol messaging. This involves a series of tests to ensure that all message types (e.g. New Order, Cancel, Execution Report) are sent and received correctly.

- 
**User Acceptance Testing (UAT)** The trading desk and operations teams conduct UAT to validate the end-to-end workflow. This includes placing test orders, verifying execution reports, and ensuring that trades flow correctly to the firm’s back-office systems.

> The execution of an SI onboarding project is a regimented, multi-phase process that culminates in rigorous testing to ensure complete operational and technological integrity before any client order is routed.

![A multi-layered, circular device with a central concentric lens. It symbolizes an RFQ engine for precision price discovery and high-fidelity execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-for-precision-execution.jpg)

## Phase 4 Go-Live and Ongoing Monitoring

The final phase is the activation of the SI for live trading. This is done in a controlled and phased manner to minimize any potential disruption.

The go-live process typically involves a gradual ramp-up of trading volume, starting with small, non-critical orders. The performance of the SI is closely monitored in the initial days and weeks of trading. This includes tracking execution quality, system stability, and settlement rates.

A formal post-live review is conducted to assess the success of the onboarding project and to identify any lessons learned. The ongoing monitoring of the SI becomes part of the firm’s regular [counterparty risk management](https://prime.greeks.live/area/counterparty-risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) process, with periodic reviews to ensure that the SI continues to meet the firm’s standards.

![A dark, glossy sphere atop a multi-layered base symbolizes a core intelligence layer for institutional RFQ protocols. This structure depicts high-fidelity execution of digital asset derivatives, including Bitcoin options, within a prime brokerage framework, enabling optimal price discovery and systemic risk mitigation](https://options.greeks.live/wp-content/uploads/2025/07/institutional-rfq-protocol-architecture-for-digital-asset-derivatives.jpg)

## References

- Fenergo. “MiFID II ▴ 6 Key Changes for Client Lifecycle Management.” Fenergo, 15 June 2017.

- International Capital Market Association. “MiFID II/R ▴ Systematic Internalisers An ICMA ‘FAQ’ for bond markets.” ICMA, Nov. 2016.

- Societe Generale. “MIFID II LEAFLET.” Societe Generale Corporate & Investment Banking, 2017.

- European Securities and Markets Authority. “Guidelines on MiFID II product governance requirements.” ESMA, 5 Feb. 2018, ESMA35-43-620.

- A-Team Group. “Meeting Client and Counterparty Identity Requirements Under MiFID II.” A-Team Insight, 2017.

![A sleek, dark teal, curved component showcases a silver-grey metallic strip with precise perforations and a central slot. This embodies a Prime RFQ interface for institutional digital asset derivatives, representing high-fidelity execution pathways and FIX Protocol integration](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine.jpg)

## Reflection

The process of onboarding a Systematic Internaliser is a profound exercise in institutional self-awareness. It forces a firm to articulate its own risk appetite, its operational capabilities, and its strategic vision for [liquidity sourcing](https://prime.greeks.live/area/liquidity-sourcing/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). The frameworks, checklists, and quantitative models are the external manifestations of this internal calculus. They are the tools through which a firm defines its own standards of excellence and holds its counterparties to them.

Ultimately, the decision to connect with a new SI is a decision about the kind of firm you want to be. Is your operational framework robust enough to handle the complexities of a bilateral relationship? Is your technological architecture agile enough to integrate a new liquidity source seamlessly? Is your [risk management](https://prime.greeks.live/area/risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) culture strong enough to continuously monitor and manage the associated exposures?

The due diligence process provides the answers to these questions. It is a mirror that reflects the firm’s own readiness to compete in an increasingly complex and fragmented market landscape. The real value of the process lies not just in the selection of a counterparty, but in the strengthening of the firm’s own internal systems and controls.

![An Execution Management System module, with intelligence layer, integrates with a liquidity pool hub and RFQ protocol component. This signifies atomic settlement and high-fidelity execution within an institutional grade Prime RFQ, ensuring capital efficiency for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/08/prime-os-orchestrating-institutional-digital-asset-derivatives-rfq-protocols-for-optimal-execution.jpg)

## Glossary

<a href="https://prime.greeks.live/question/what-are-the-primary-inventory-risks-an-si-faces-when-executing-large-client-orders-in-bonds/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A textured spherical digital asset, resembling a lunar body with a central glowing aperture, is bisected by two intersecting, planar liquidity streams. This depicts institutional RFQ protocol, optimizing block trade execution, price discovery, and multi-leg options strategies with high-fidelity execution within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-optimized-rfq-execution-protocol-dynamic-liquidity-management.jpg)

## Executing Client Orders

A Systematic Internaliser's primary inventory risks are the market, liquidity, and adverse selection exposures inherent in principal trading. </a><a href="https://prime.greeks.live/area/systematic-internaliser/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A luminous digital market microstructure diagram depicts intersecting high-fidelity execution paths over a transparent liquidity pool. A central RFQ engine processes aggregated inquiries for institutional digital asset derivatives, optimizing price discovery and capital efficiency within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-principal-operational-framework-price-discovery.jpg)

## 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/due-diligence-process/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract intersecting geometric forms, deep blue and light beige, represent advanced RFQ protocols for institutional digital asset derivatives. These forms signify multi-leg execution strategies, principal liquidity aggregation, and high-fidelity algorithmic pricing against a textured global market sphere, reflecting robust market microstructure and intelligence layer](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-multi-leg-execution-algorithmic-pricing-global-liquidity-principal-trading-systemic-integration-high-fidelity-execution.jpg)

## Due Diligence Process

Meaning ▴ The Due Diligence Process constitutes a systematic, comprehensive investigative protocol preceding significant transactional or strategic commitments within the institutional digital asset derivatives domain. </a><a href="https://prime.greeks.live/area/due-diligence/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precise metallic cross, symbolizing principal trading and multi-leg spread structures, rests on a dark, reflective market microstructure surface. Glowing algorithmic trading pathways illustrate high-fidelity execution and latency optimization for institutional digital asset derivatives via private quotation](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-protocol-execution-architecture.jpg)

## Due Diligence

Meaning ▴ Due diligence refers to the systematic investigation and verification of facts pertaining to a target entity, asset, or counterparty before a financial commitment or strategic decision is executed. </a><a href="https://prime.greeks.live/area/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, abstract system interface with a central spherical lens representing real-time Price Discovery and Implied Volatility analysis for institutional Digital Asset Derivatives. Its precise contours signify High-Fidelity Execution and robust RFQ protocol orchestration, managing latent liquidity and minimizing slippage for optimized Alpha Generation](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-institutional-digital-asset-derivatives-execution-via-optimized-rfq-protocols-enhancing-market-microstructure.jpg)

## Mifid Ii

Meaning ▴ MiFID II, the Markets in Financial Instruments Directive II, constitutes a comprehensive regulatory framework enacted by the European Union to govern financial markets, investment firms, and trading venues. </a><a href="https://prime.greeks.live/area/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precisely engineered system features layered grey and beige plates, representing distinct liquidity pools or market segments, connected by a central dark blue RFQ protocol hub. Transparent teal bars, symbolizing multi-leg options spreads or algorithmic trading pathways, intersect through this core, facilitating price discovery and high-fidelity execution of digital asset derivatives via an institutional-grade Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-facilitating-high-fidelity-multi-leg-options-spread-execution-best-price-discovery-and-latent-liquidity-access-for-prime-brokerage.jpg)

## Best Execution

Meaning ▴ Best Execution is the obligation to obtain the most favorable terms reasonably available for a client's order. </a><a href="https://prime.greeks.live/question/how-does-operational-due-diligence-differ-from-financial-due-diligence/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![An advanced digital asset derivatives system features a central liquidity pool aperture, integrated with a high-fidelity execution engine. This Prime RFQ architecture supports RFQ protocols, enabling block trade processing and price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-protocol-execution-system-architecture.jpg)

## Diligence Process

Financial diligence verifies an asset's recorded value; operational diligence assesses its system's potential to create future value. </a><a href="https://prime.greeks.live/area/risk-appetite/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central metallic bar, representing an RFQ block trade, pivots through translucent geometric planes symbolizing dynamic liquidity pools and multi-leg spread strategies. This illustrates a Principal's operational framework for high-fidelity execution and atomic settlement within a sophisticated Crypto Derivatives OS, optimizing private quotation workflows](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-facilitating-high-fidelity-price-discovery-and-optimal-capital-efficiency-within-advanced-market-microstructure.jpg)

## Risk Appetite

Meaning ▴ Risk Appetite represents the quantitatively defined maximum tolerance for exposure to potential loss that an institution is willing to accept in pursuit of its strategic objectives. </a><a href="https://prime.greeks.live/question/how-does-the-cover-2-standard-enhance-the-resilience-of-a-central-counterparty/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sophisticated, modular mechanical assembly illustrates an RFQ protocol for institutional digital asset derivatives. Reflective elements and distinct quadrants symbolize dynamic liquidity aggregation and high-fidelity execution for Bitcoin options](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-protocol-architecture.jpg)

## Operational Resilience

The Cover 2 standard fortifies a CCP's architecture by pre-funding resources to absorb the failure of its two largest members. </a><a href="https://prime.greeks.live/area/financial-stability/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![An abstract system depicts an institutional-grade digital asset derivatives platform. Interwoven metallic conduits symbolize low-latency RFQ execution pathways, facilitating efficient block trade routing](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-rfq-execution-engine.jpg)

## Financial Stability

Meaning ▴ Financial Stability denotes a state where the financial system effectively facilitates the allocation of resources, absorbs economic shocks, and maintains continuous, predictable operations without significant disruptions that could impede real economic activity. </a><a href="https://prime.greeks.live/area/counterparty-risk-framework/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Precision-engineered metallic tracks house a textured block with a central threaded aperture. This visualizes a core RFQ execution component within an institutional market microstructure, enabling private quotation for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-execution-framework-precision-microstructure-component.jpg)

## Counterparty Risk Framework

Meaning ▴ The Counterparty Risk Framework constitutes a systematic methodology engineered for the identification, precise measurement, continuous monitoring, and effective mitigation of potential losses stemming from a counterparty's failure to fulfill its contractual obligations. </a><a href="https://prime.greeks.live/area/ongoing-monitoring/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, multi-faceted plane represents a Principal's operational framework and Execution Management System. A central glossy black sphere signifies a block trade digital asset derivative, executed with atomic settlement via an RFQ protocol's private quotation](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-principal-os-high-fidelity-execution.jpg)

## Ongoing Monitoring

Meaning ▴ Ongoing Monitoring defines the continuous, automated process of observing, collecting, and analyzing operational metrics, financial positions, and system health indicators across a digital asset trading infrastructure. </a><a href="https://prime.greeks.live/area/financial-stability-analysis/?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)

## Financial Stability Analysis

Meaning ▴ Financial Stability Analysis constitutes the rigorous, systemic evaluation of the resilience and robustness of a financial system, particularly in the context of interconnected institutional digital asset derivatives markets, against potential shocks and vulnerabilities. </a><a href="https://prime.greeks.live/question/how-does-the-rise-of-systematic-internalisers-affect-the-overall-health-of-price-discovery-in-equity-markets/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Internal hard drive mechanics, with a read/write head poised over a data platter, symbolize the precise, low-latency execution and high-fidelity data access vital for institutional digital asset derivatives. This embodies a Principal OS architecture supporting robust RFQ protocols, enabling atomic settlement and optimized liquidity aggregation within complex market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-precision-execution-system-microstructure.jpg)

## Financial Health

The rise of Systematic Internalisers alters equity price discovery by segmenting order flow, which can enhance execution for some while potentially degrading the public price signal for all. </a><a href="https://prime.greeks.live/area/execution-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision-engineered control mechanism, featuring a ribbed dial and prominent green indicator, signifies Institutional Grade Digital Asset Derivatives RFQ Protocol optimization. This represents High-Fidelity Execution, Price Discovery, and Volatility Surface calibration for Algorithmic Trading](https://options.greeks.live/wp-content/uploads/2025/07/principal-operational-framework-precision-calibration-for-institutional-digital-asset-derivatives-rfq-protocol-high-fidelity-execution-prime-os-and-volatility-surface-optimization.jpg)

## Execution Quality

Meaning ▴ Execution Quality quantifies the efficacy of an order's fill, assessing how closely the achieved trade price aligns with the prevailing market price at submission, alongside consideration for speed, cost, and market impact. </a><a href="https://prime.greeks.live/guide/a-comparative-analysis-of-crypto-derivatives-platforms/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Sleek, modular infrastructure for institutional digital asset derivatives trading. Its intersecting elements symbolize integrated RFQ protocols, facilitating high-fidelity execution and precise price discovery across complex multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-system-optimizing-high-fidelity-block-trade-liquidity-and-multi-leg-spread-precision.jpg)

## Comparative Analysis Model

Command your execution and unlock professional-grade returns with the definitive guide to crypto derivatives platforms. </a><a href="https://prime.greeks.live/area/risk-framework/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central RFQ engine orchestrates diverse liquidity pools, represented by distinct blades, facilitating high-fidelity execution of institutional digital asset derivatives. Metallic rods signify robust FIX protocol connectivity, enabling efficient price discovery and atomic settlement for Bitcoin options](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-liquidity-orchestration.jpg)

## Risk Framework

Meaning ▴ A Risk Framework constitutes a structured, systematic methodology employed to identify, measure, monitor, and control financial exposures inherent in trading operations, particularly within the complex landscape of institutional digital asset derivatives. </a><a href="https://prime.greeks.live/guide/a-comparative-analysis-of-crypto-derivatives-platforms/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Intersecting transparent and opaque geometric planes, symbolizing the intricate market microstructure of institutional digital asset derivatives. Visualizes high-fidelity execution and price discovery via RFQ protocols, demonstrating multi-leg spread strategies and dark liquidity for capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-market-microstructure-architecture.jpg)

## Comparative Analysis

Command your execution and unlock professional-grade returns with the definitive guide to crypto derivatives platforms. </a><a href="https://prime.greeks.live/area/best-execution-obligations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Precision system for institutional digital asset derivatives. Translucent elements denote multi-leg spread structures and RFQ protocols](https://options.greeks.live/wp-content/uploads/2025/07/precision-execution-infrastructure-for-institutional-digital-asset-derivatives-request-for-quote-protocol-optimization.jpg)

## Best Execution Obligations

Meaning ▴ Best Execution Obligations define the regulatory and fiduciary imperative for financial intermediaries to achieve the most favorable terms reasonably available for client orders. </a><a href="https://prime.greeks.live/question/what-are-the-operational-consequences-of-misreporting-under-mifid-ii-versus-a-reporting-failure-under-emir/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Sleek metallic system component with intersecting translucent fins, symbolizing multi-leg spread execution for institutional grade digital asset derivatives. It enables high-fidelity execution and price discovery via RFQ protocols, optimizing market microstructure and gamma exposure for capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-trading-system-rfq-protocols.jpg)

## Under Mifid

A MiFID II misreport corrupts market surveillance data; an EMIR failure hides systemic risk, creating distinct operational and reputational threats. </a><a href="https://prime.greeks.live/guide/the-institutional-playbook-for-rfq-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, futuristic object with a glowing line and intricate metallic core, symbolizing a Prime RFQ for institutional digital asset derivatives. It represents a sophisticated RFQ protocol engine enabling high-fidelity execution, liquidity aggregation, atomic settlement, and capital efficiency for multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/advanced-institutional-digital-asset-derivatives-rfq-protocol-execution-engine-for-optimal-liquidity-aggregation-and-atomic-settlement.jpg)

## Operational Playbook

Stop searching for liquidity. </a><a href="https://prime.greeks.live/question/what-are-the-primary-risks-associated-with-information-leakage-during-the-shopping-phase-of-a-block-trade/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precise stack of multi-layered circular components visually representing a sophisticated Principal Digital Asset RFQ framework. Each distinct layer signifies a critical component within market microstructure for high-fidelity execution of institutional digital asset derivatives, embodying liquidity aggregation across dark pools, enabling private quotation and atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/principal-digital-asset-rfq-protocol-layers-for-high-fidelity-execution.jpg)

## Execution Phase

Information leakage risk in block trading is the degradation of execution price due to the pre-emptive market impact of leaked trade intent. </a><a href="https://prime.greeks.live/question/how-does-credit-rating-directly-impact-illiquid-bond-tca-calculations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstractly depicting an Institutional Grade Crypto Derivatives OS component. Its robust structure and metallic interface signify precise Market Microstructure for High-Fidelity Execution of RFQ Protocol and Block Trade orders](https://options.greeks.live/wp-content/uploads/2025/07/principals-integrated-crypto-derivatives-rfq-protocol-architecture.jpg)

## Credit Rating

A bond's credit rating is the foundational input that defines its liquidity profile and thus dictates the expected friction and cost within TCA models. </a><a href="https://prime.greeks.live/area/fix-protocol/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A dark blue sphere, representing a deep liquidity pool for digital asset derivatives, opens via a translucent teal RFQ protocol. This unveils a principal's operational framework, detailing algorithmic trading for high-fidelity execution and atomic settlement, optimizing market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/rfq-block-trade-liquidity-microstructure-execution-prime-os-derivatives-capital.jpg)

## Fix Protocol

Meaning ▴ The Financial Information eXchange (FIX) Protocol is a global messaging standard developed specifically for the electronic communication of securities transactions and related data. </a><a href="https://prime.greeks.live/area/counterparty-risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![An intricate, transparent cylindrical system depicts a sophisticated RFQ protocol for digital asset derivatives. Internal glowing elements signify high-fidelity execution and algorithmic trading](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-protocol-architecture.jpg)

## Counterparty Risk Management

Meaning ▴ Counterparty Risk Management refers to the systematic process of identifying, assessing, monitoring, and mitigating the credit risk arising from a counterparty's potential failure to fulfill its contractual obligations. </a><a href="https://prime.greeks.live/area/liquidity-sourcing/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A light sphere, representing a Principal's digital asset, is integrated into an angular blue RFQ protocol framework. Sharp fins symbolize high-fidelity execution and price discovery](https://options.greeks.live/wp-content/uploads/2025/07/principals-core-asset-rfq-protocol-framework-for-digital-derivatives.jpg)

## Liquidity Sourcing

Meaning ▴ Liquidity Sourcing refers to the systematic process of identifying, accessing, and aggregating available trading interest across diverse market venues to facilitate optimal execution of financial transactions. </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">
![A transparent, multi-faceted component, indicative of an RFQ engine's intricate market microstructure logic, emerges from complex FIX Protocol connectivity. Its sharp edges signify high-fidelity execution and price discovery precision for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-optimized-for-best-execution.jpg)

## 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>

**Tags:** [Systematic Internaliser](https://options.greeks.live/area/systematic-internaliser/), [Risk Framework](https://options.greeks.live/area/risk-framework/), [Ongoing Monitoring](https://options.greeks.live/area/ongoing-monitoring/), [Know Your Counterparty (KYC)](https://options.greeks.live/area/know-your-counterparty-kyc/), [Counterparty Due Diligence](https://options.greeks.live/area/counterparty-due-diligence/), [Financial Stability Analysis](https://options.greeks.live/area/financial-stability-analysis/)	

## Discover More

- 
### [How Can an Institution Systematically Build and Implement a Quantitative Dealer Scorecard for Performance Evaluation?](https://options.greeks.live/question/how-can-an-institution-systematically-build-and-implement-a-quantitative-dealer-scorecard-for-performance-evaluation/)
![A futuristic, intricate central mechanism with luminous blue accents represents a Prime RFQ for Digital Asset Derivatives Price Discovery. Four sleek, curved panels extending outwards signify diverse Liquidity Pools and RFQ channels for Block Trade High-Fidelity Execution, minimizing Slippage and Latency in Market Microstructure operations.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-platform-2.jpg)

A quantitative dealer scorecard systematically translates execution data into a risk-adjusted performance hierarchy for liquidity optimization.

- 
### [How Does the Concept of “Legitimate Reliance” Affect Best Execution Obligations in RFQ Trading?](https://options.greeks.live/question/how-does-the-concept-of-legitimate-reliance-affect-best-execution-obligations-in-rfq-trading/)
![A glossy, segmented sphere with a luminous blue 'X' core represents a Principal's Prime RFQ. It highlights multi-dealer RFQ protocols, high-fidelity execution, and atomic settlement for institutional digital asset derivatives, signifying unified liquidity pools, market microstructure, and capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/08/prime-os-core-for-best-rfq-digital-asset-derivatives-institutional-trade-flow.jpg)

Legitimate reliance determines if best execution duties apply to an RFQ, shifting the focus from price alone to the client-dealer context.

- 
### [How Does the Onboarding Process for a New Dealer Integrate with the Principles of an Established Risk Appetite Framework?](https://options.greeks.live/question/how-does-the-onboarding-process-for-a-new-dealer-integrate-with-the-principles-of-an-established-risk-appetite-framework/)
![A precision-engineered interface for institutional digital asset derivatives. A circular system component, perhaps an Execution Management System EMS module, connects via a multi-faceted Request for Quote RFQ protocol bridge to a distinct teal capsule, symbolizing a bespoke block trade. This depicts high-fidelity execution, optimizing market microstructure within a Principal's operational framework for atomic settlement.](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-interface-for-institutional-digital-asset-derivatives-request-for-quote-protocol-high-fidelity-execution-within-principal-operating-system.jpg)

A dealer onboarding process integrates with a risk appetite framework by translating risk tolerance into quantifiable, actionable controls.

- 
### [How Do Regulatory Frameworks like MiFID II Influence Counterparty Selection and Best Execution Policies?](https://options.greeks.live/question/how-do-regulatory-frameworks-like-mifid-ii-influence-counterparty-selection-and-best-execution-policies/)
![A precision mechanism, symbolizing an algorithmic trading engine, centrally mounted on a market microstructure surface. Lens-like features represent liquidity pools and an intelligence layer for pre-trade analytics, enabling high-fidelity execution of institutional grade digital asset derivatives via RFQ protocols within a Principal's operational framework.](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-protocol-microstructure.jpg)

MiFID II mandates a systemic shift, transforming counterparty selection into a data-driven process governed by quantifiable best execution.

- 
### [How Does MiFID II Define Best Execution for Smart Order Routers?](https://options.greeks.live/question/how-does-mifid-ii-define-best-execution-for-smart-order-routers/)
![A sleek, metallic, X-shaped object with a central circular core floats above mountains at dusk. It signifies an institutional-grade Prime RFQ for digital asset derivatives, enabling high-fidelity execution via RFQ protocols, optimizing price discovery and capital efficiency across dark pools for best execution.](https://options.greeks.live/wp-content/uploads/2025/07/advanced-principal-rfq-protocol-architecture-for-institutional-digital-asset-derivatives-optimal-price-discovery-and-execution.jpg)

MiFID II requires SORs to systematically process multiple execution factors to demonstrably achieve the best possible client result.

- 
### [How Should an OMS Be Configured to Handle Different Counterparty SI Designations?](https://options.greeks.live/question/how-should-an-oms-be-configured-to-handle-different-counterparty-si-designations/)
![A slender metallic probe extends between two curved surfaces. This abstractly illustrates high-fidelity execution for institutional digital asset derivatives, driving price discovery within market microstructure. It represents Prime RFQ protocol precision navigating dark liquidity for best execution and capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/precision-instrument-navigating-institutional-digital-asset-derivatives-rfq-protocols-for-optimal-price-discovery-and-high-fidelity-execution.jpg)

An OMS must be configured to translate dynamic, instrument-level SI designations into automated, compliant routing and reporting logic.

- 
### [How Does a Best Execution Committee Quantify Qualitative Counterparty Factors?](https://options.greeks.live/question/how-does-a-best-execution-committee-quantify-qualitative-counterparty-factors/)
![A transparent glass sphere rests precisely on a metallic rod, connecting a grey structural element and a dark teal engineered module with a clear lens. This symbolizes atomic settlement of digital asset derivatives via private quotation within a Prime RFQ, showcasing high-fidelity execution and capital efficiency for RFQ protocols and liquidity aggregation.](https://options.greeks.live/wp-content/uploads/2025/07/architecting-high-fidelity-execution-for-institutional-digital-asset-derivatives-rfq-protocols-and-systemic-liquidity-aggregation.jpg)

A Best Execution Committee quantifies qualitative factors by architecting a weighted scoring system that translates subjective inputs into objective, auditable risk metrics.

- 
### [How Can a Firm Quantitatively Justify Its Choice of RFQ Counterparties?](https://options.greeks.live/question/how-can-a-firm-quantitatively-justify-its-choice-of-rfq-counterparties/)
![Intersecting transparent planes and glowing cyan structures symbolize a sophisticated institutional RFQ protocol. This depicts high-fidelity execution, robust market microstructure, and optimal price discovery for digital asset derivatives, enhancing capital efficiency and minimizing slippage via aggregated inquiry.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-framework-for-optimal-market-microstructure-and-capital-efficiency.jpg)

A firm justifies RFQ counterparty choice by engineering a data-driven liquidity network, measured by a multi-factor execution and risk model.

- 
### [What Are the Essential Data Points for Building a Robust Counterparty Performance Scorecard?](https://options.greeks.live/question/what-are-the-essential-data-points-for-building-a-robust-counterparty-performance-scorecard/)
![Polished metallic pipes intersect via robust fasteners, set against a dark background. This symbolizes intricate Market Microstructure, RFQ Protocols, and Multi-Leg Spread execution. It highlights High-Fidelity Execution, Atomic Settlement, and Capital Efficiency within a Principal's Operational Framework for Digital Asset Derivatives.](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-metallic-nodes-illustrating-rfq-protocols-for-multi-leg-digital-asset-derivatives-institutional-execution.jpg)

A robust counterparty scorecard synthesizes quantitative and qualitative data into a predictive risk assessment, enabling proactive risk mitigation.

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---

**Original URL:** https://options.greeks.live/question/what-are-the-primary-due-diligence-requirements-for-onboarding-a-new-systematic-internaliser-counterparty/
