How Does Price Discovery Differ between an RFQ System and a CLOB in Options Markets?
In a CLOB, price discovery is transparent and continuous, determined by the best public bid and offer. In an RFQ system, price discovery is decentralized and quote-driven.
The price is determined through a closed negotiation process, where the initiator compares multiple private quotes. The final execution price is known only to the involved parties, making the process less transparent to the wider market.
Glossar
Inter-Market Price Data
Information ⎊ Inter-Market Price Data refers to the aggregated stream of real-time trading information, including best bid and offer prices, last sale prices, and volume, collected from multiple distinct trading venues for the same underlying asset or derivative.
RFQ Price
Solicitation ⎊ An RFQ Price, within cryptocurrency options and derivatives, represents the indicative mid-market price a liquidity provider offers for a specific notional amount of an asset, responding to a Request for Quotation.
Price Discovery
Revelation ⎊ Price discovery within cryptocurrency markets, particularly for derivatives, represents a dynamic process where consensus on an asset’s intrinsic value emerges through continuous trading and order flow interaction.
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.