What is an RFQ?

Published On

May 4, 2020

An RFQ (Request For Quote) is an electronic notification sent to a counterparty of choice (Maker) requesting a price quote for a specific options or futures strategy.

An RFQ can be a multi-legged spread or a single instrument type and can be configured for the following fields:

  1. Clearing Venue

  2. Product and Instrument Type

  3. Strategy

  4. Account or Sub-Account

All RFQs are sent as two-way pricing requests implying that the Taker has no obligation to show any preference as a Buyer or Seller

The receiver (Maker) is alerted within the communication channel (Trade Channel) to submit a Bid and an Offer for the requested strategy

These Bids and Offers are active and tradable. The Taker can then choose to Buy, Sell or continue to monitor the market (Do Nothing).

What are the benefits of RFQ block trading via Paradigm?

On-demand liquidity for large size orders, especially when screen markets thin out

More competitive pricing for multi-leg spread structures

Single execution for multi-leg spreads and combo trades, including delta neutral structures with Futures and Options.

  1. This eliminates any execution risk associated with manual entry of each leg (i.e. market movement, counterparty representation, and on-screen front-running.)

Positions and prices automatically settle in your clearing accounts, so don’t have to worry about time lag