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Why Are Non-Standardized Options Typically Traded via RFQ Rather than a CLOB?

Non-standardized options require customized pricing and negotiation, which only the bilateral RFQ model supports.
Greeks.Live13.11.25

Why Are Non-Standardized Options Typically Traded via RFQ Rather than a CLOB?

Non-standardized, or bespoke, options (like exotic or customized strike/expiry options) lack the uniformity required for mass market trading on a CLOB. Their unique terms make it impossible to create a liquid order book.

The RFQ process allows the buy-side to specify the exact terms and solicit tailored quotes from market makers willing to price and assume the specific risk. This negotiation is essential for illiquid or complex instruments.

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