Can an RFQ Platform Integrate with a CLOB for Hedging Purposes?
Yes, sophisticated RFQ platforms used by market makers often integrate directly with Central Limit Order Books (CLOBs) for immediate hedging. When a market maker executes a large option trade via RFQ, they acquire a new risk position (e.g.
Delta exposure). To maintain a market-neutral book, their system automatically sends offsetting orders to the CLOB for the underlying asset or futures contract.
This immediate, automated hedging is vital for managing risk and minimizing slippage.
Glossar
Central Limit Order Books
Structure ⎊ Central Limit Order Books are the foundational electronic marketplaces where limit orders to buy and sell a specific financial instrument are collected, time-stamped, and prioritized based on price and sequence, determining the current market depth.
Sophisticated Rfq Platforms
Architecture ⎊ Sophisticated RFQ Platforms are technologically advanced trading systems designed for institutional execution of large-sized or complex cryptocurrency options and derivatives.
CLOB
Execution ⎊ Central Limit Order Books (CLOBs) represent the foundational infrastructure for price discovery and trade execution within cryptocurrency exchanges and regulated derivatives markets, functioning as a digitized order book mirroring traditional financial systems.
Rfq Platform
Definition ⎊ Rfq Platform is the dedicated trading technology used by institutional participants to solicit firm, private pricing quotes from multiple liquidity providers simultaneously for large or complex derivative trades.