What Is a Request for Quote (RFQ) System and How Does It Inherently Mitigate Front-Running? ⎊ Path

What Is a Request for Quote (RFQ) System and How Does It Inherently Mitigate Front-Running?

An RFQ system is a method of trading where a buyer requests a price (a quote) from one or more market makers. The market makers respond with their best bid/ask prices, and the buyer chooses the best quote.

This process is typically private and off-exchange, meaning the order intention is not publicly visible in an order book. By keeping the order flow private, the RFQ system prevents front-runners from observing the pending order and trading ahead of it.

How Does the Concept of a Request for Quote (RFQ) System Relate to Dark Pools in Traditional Finance?

What Is ‘Front-Running’ and How Is It Prevented by Dark Pools?

How Do RFQ Platforms Prevent Information Leakage about the Trade Size?

How Do ‘Indicative Quotes’ Differ from ‘Firm Quotes’ in an RFQ System?

How Does a ‘Private Transaction Relay’ Prevent a Searcher’s Strategy from Being Copied?

How Does Price Discovery Differ between an RFQ System and a CLOB in Options Markets?

What Is the Concept of “Hidden Liquidity” in an Order Book?

What Is the Advantage of Using an RFQ System over a Central Limit Order Book for Large Options Trades?

Glossar

Request for Quote

Inquiry ⎊ A Request for Quote (RFQ) within cryptocurrency derivatives represents a formalized solicitation from a potential client to multiple counterparties for pricing and terms related to a specific transaction.