Why Do Institutional Traders Often Prefer the Non-Custodial, Negotiated Nature of RFQ for Large Block Trades?

RFQ allows institutions to negotiate better pricing for large orders directly with multiple liquidity providers, leading to superior execution quality and minimal market impact. The non-custodial nature means they retain control of their assets in their own secure custody or prime broker.

This avoids the significant risk of placing massive funds on an exchange platform.