How Does an RFQ Platform Handle Message Throttling or Rate Limits from Exchanges?
The platform must implement internal queue management and dynamic rate limiters to control the outbound message flow. It tracks the current rate limit usage per exchange and strategically spaces out non-critical messages.
When limits are approached, the system prioritizes critical messages, such as trade executions or risk-reducing cancellations. A smart platform will also dynamically adjust quoting aggressiveness based on available rate limit capacity.
Glossar
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.
Rate Limits
Constraint ⎊ Rate limits within cryptocurrency, options trading, and financial derivatives represent predetermined restrictions on the frequency or volume of requests an API or trading system can execute over a defined period.
Message Throttling
Control ⎊ Message Throttling is the active control mechanism employed by algorithmic trading systems to regulate the rate of outbound message flow to an exchange, ensuring strict adherence to predefined exchange rate limits.
Dynamic Rate Limiters
Mechanism ⎊ Dynamic Rate Limiters are sophisticated exchange-side controls that automatically adjust the permissible message throughput for individual trading participants based on real-time system load and prevailing market conditions.
Internal Queue Management
Mechanism ⎊ Internal Queue Management refers to the sophisticated software mechanism within an algorithmic trading system responsible for organizing, sequencing, and dispatching outbound messages to the exchange in a controlled and efficient manner.