What Is "Market Impact" and How Does RFQ Help to Minimize It? ▴ Learn

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

Market impact is the adverse price movement caused by a large order being executed, which can significantly worsen the average execution price. RFQ minimizes this by keeping the order off the public order book.

Institutions solicit quotes privately from a selected group of liquidity providers, allowing the entire block trade to be negotiated and executed at a single price without signaling the order to the wider market.

How Does ‘Market Impact’ Affect the Choice between RFQ and CLOB for a Large Options Order?

How Does the Minimum RFQ Size Relate to Regulatory Requirements for Block Trades?

Can a Block Trade Be Used to Establish a Large Derivatives Position?

What Is the Role of a Centralized Exchange’s Matching Engine in Minimizing Large Order Slippage?