How Is ‘Mark-up’ Calculated in a Principal-Based OTC Crypto Trade?

In a principal-based OTC crypto trade, the 'mark-up' is the difference between the price the OTC desk executes the trade at with the client and the price at which the desk can execute an offsetting hedge trade in the market. It is essentially the desk's profit margin on the trade.

This mark-up covers the desk's costs, including inventory risk and operational expenses, and is often factored into the client's quoted price.