Why Is Discretion Important for Institutional Traders Executing Large Block Trades?
Discretion, or the ability to trade without immediately revealing one's intention to the broader market, is crucial for institutional traders. Executing a large block trade publicly on a CLOB can signal market direction, causing other traders to front-run the order and move the price against the institution.
This market impact results in negative slippage. RFQ platforms provide discretion by allowing the trader to only reveal their intent to selected, trusted liquidity providers.
Glossar
Large Block
Scale ⎊ Large Block transactions, within cryptocurrency networks, represent aggregated transaction data exceeding typical block sizes, impacting network throughput and propagation times.
Institutional Traders
Capital ⎊ Institutional traders, within cryptocurrency derivatives and options markets, represent a significant source of liquidity and price discovery, often deploying substantial capital across diverse strategies.