What Is the Concept of “Committed Liquidity” in an RFQ Context?
Committed liquidity refers to the obligation of a liquidity provider (LP) to provide quotes for a specified minimum size and duration, often under a formal agreement with the RFQ platform or exchange. This commitment ensures that traders initiating an RFQ have a reliable source of execution.
In return for this commitment, LPs may receive incentives like reduced trading fees or preferred data access. It underpins the reliability of the RFQ market.