What Is the Risk of “Information Leakage” in a Multi-Dealer RFQ System?

Information leakage is the risk that the trade initiator's intent (e.g. their desire to buy a large block) becomes known to the market before the trade is executed. In a multi-dealer RFQ, this can happen if a dealer who received the request "shops" the order or uses the information to trade against the initiator in the underlying market.

While RFQ platforms are designed for discretion, the risk remains that the request itself signals market intent, potentially leading to front-running.