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What Is “Market Impact” and How Does RFQ Help Mitigate It?

The adverse price change caused by a large trade; RFQ mitigates it by facilitating private, off-exchange negotiation.
Greeks.Live12.11.25

What Is “Market Impact” and How Does RFQ Help Mitigate It?

Market impact is the adverse price movement that occurs when a large trade is executed, pushing the price against the trader. RFQ mitigates this by allowing the institutional trader to negotiate the entire block trade privately with a select group of liquidity providers.

Since the order is not visible on a public order book, other market participants cannot front-run or adjust their prices based on the pending trade.

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