In the Context of Derivatives, What Is a ‘Request for Quote’ (RFQ) System?

An RFQ system is a method of price discovery common in over-the-counter (OTC) and institutional derivatives markets. A trader sends a request to multiple liquidity providers (LPs) simultaneously for a specific contract (e.g. a large crypto options block trade).

The LPs then compete by submitting their best executable bid and ask prices. The trader chooses the best quote, ensuring competitive pricing and often better execution than a public exchange.