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Getting Started – Single-dealer RFQ

Connect, send and receive RFQs directly from counterparties.

Creating a Trade Channel (includes RFQ functionality)

1

Click the create icon at the right of the Search Bar

2

Select New Trade Channel from dropdown

3

Search for desired Counterparty Name

  1. For a counterparty to appear as Approved, both desks need to add each other to their Dashboard's Approved list
4

Select the counterparty name

5

Click Invite button

6

You will see trade channel created in right hand side menu

  1. All members of both desks are added to the Trade Channel
  2. To add or remove a member from the Trade Channel, click the name in top left of the channel's window
7

By default a CF Future, DO Put, BTC Future and OG Put buttons are created in the channel ribbon. This is where all trade buttons will be saved.

Sending an RFQ

1

Click blue “RFQ” button in any trade channel

2

Select choices from each drop-down: Venue, Product, Structure, Account

3

As those combinations are selected, the structure will populate a Strategy Details table to input RFQ details: Expiry, Strike, Contracts

  1. The “Action” column for each option leg in pre-defined strategies, are set to be presented from the Buyer’s Perspective. This “Action” does not indicate intention of execution. Execution occurs after price response from Maker, and means the following:
  1. "Buying" the strategy (lifting the Maker's offer) will result in executing each leg in the same direction as per it's Action entered in the Strategy Details table
  2. "Selling" the strategy (hitting the Maker's Bid) will result in executing each leg in the opposite direction of it's Action entered in the Strategy Details table
  1. Expiry and Strikes are the listed contracts available for the product selected
  2. All product quantities are entered in terms of # of contracts. A full summary of contract multipliers for each venue here.
4

You can toggle on the “Add Hedge” function, in order to add future leg(s) with the option structure. Follow the next section on those details.

5

Click “Save Strategy” to add it as Quick Trade Button to that Trade Channel

6

Click “Submit RFQ” to send notification to Trade Channel Counterparty

Add Hedge Toggle

1

To Hedge an option structure, toggle the “Add Hedge” function to on

2

Based on your pre-defined structure, either one or two future legs will be added to the Strategy Details table

  1. If it is a structure that only has one option expiration, then one future leg will be added
  2. If it is a structure that has two option expirations (i.e. Calendar Spreads), then two future legs will be added to hedged deltas in each option expiration
3

Complete the following fields: Action, Expiry, Leg Price and Contracts

  1. Action for the future leg can be set to either BUY or SELL in a manner that hedges the constructed options strategy. (Example given in our blog)
  1. Since the constructed strategy is always from a Buyers perspective, the action on the Futures leg hedges the "Buyers" perspective of the constructed options strategy.
  2. However for every RFQ there will be two prices quoted by the responding counterparty. It is therefore important to note that "Buying" the strategy (lifting the Maker's offer) will result in executing each leg, including the Futures leg, as per it's Action displayed in the Strategy Details table at the time the RFQ was constructed
  3. Conversely, "Selling" the strategy will result in executing each leg in the opposite direction of the Action displayed in the Strategy Details table at the time the RFQ was constructed
  1. Expiry is the future contract expiration
  2. Leg Price is the price of the future where the option structure is hedged
  3. All product quantities are entered in terms of # of contracts. A full summary of contract multipliers for each venue here.
    4

    If you would like to remove one or multiple future legs, you can click the red “x” on the far right of that row or toggle “Add Future” function to “off”

    Responding to an RFQ

    1

    Upon receiving the RFQ, Maker clicks the Quote button

    2

    Quote Details modal will popup

    3

    Enter the quote either by Leg Prices or Two-Way

    4

    Your market will be parsed into the TradeBot RFQ message

    5

    Market will only be live for the time set on Maker's dashboard, then the quote expires

    6

    If the Taker does not interact with the quote before the timer completes, then the quote will expire and become inactive

    7

    Anyone on the Maker Desk can cancel the Maker quote by clicking the Cancel button

    Agreeing on a Price

    1

    When you agree on a price the party who initiated the RFQ (Taker) can click the Buy or Sell button, before timer completes

    2

    The Taker will get an additional confirmation pop-up window to confirm the agreement details

    3

    Once the intended action is clicked in Confirm window, the agreement is complete

    4

    A Recap of agreement details are displayed via TradeBot within the conversation window for both parties

    *Note: Either party can cancel RFQ/quote at anytime before the price agreement is completed by clicking “Cancel” button

    Post Agreement Audit Trail

    1

    Clearing on Deribit

    1. Once an Agreement is complete, details are auto-submitted to Deribit for clearing
    1. For spreads and combinations, Paradigm generates individual leg prices
    1. These prices are displayed on your Blotter under Leg Price column
    2. To view how prices are calculated, please see Paradigm Leg Price Assignment Methodology
    1. Deribit performs order and credit checks before executing and clearing every trade
    2. After these Deribit checks are complete and successful, the block trade will appear in your Deribit account’s Trade History
    2

    Email Recaps

    1. Automated emails are sent to all members on both Desks of the trade, with full agreement details
    3

    Blotter

    1. All agreement details are displayed in the product’s Blotter page
    1. Including live settlement status on the respective clearing venue

    Multi-dealer RFQ

    Overview

    1

    Select the MDRFQ icon in the laft hand side bar of your Paradigm application

    2

    All columns can be dragged to rearrange

    Trade Tape Table

    1

    Recap of all trades on the Paradigm platform, including Single and Multi-Dealer RFQ Trading, even if you did not participate in the transaction

    RFQ Table

    1

    The top table will be RFQs that you are involved in: either you sent the RFQ as a Taker or have received an RFQ as a Maker

    2

    You can see different Status of each RFQ:

    1. “Active” is an RFQ that you can quote or collecting quotes
    2. “Filled” is an RFQ that you has been executed
    3. “Canceled” is the RFQ was canceled
    4. “Trd Away” is an RFQ that has been executed by another maker
    5. “Expired” is an RFQ that has exceeded the time of the execution window – 24 hours
    3

    You may see a value in the “Desk” column:

    1. For Takers, Makers who choose to respond to your RFQ will be displayed in the "Desk" column
    2. For Makers, Takers from whom an RFQ is received are displayed in the "Desk" column.. If takers choose to be anonymous, the column will be marked "--"

    Sending an RFQ

    1

    Click the blue “RFQ” button, above your RFQ Table

    2

    Build your structure as you do in the Single-Dealer RFQ Popup

    1. Select Venue
    2. Select Product
    3. Choose Predefined or Custom Strategy
    4. Fill in the populated table details
    3

    Select the Counterparties you want to receive your RFQ

    1. You can make a counterparty a “Favorite”, by right clicking on their name
    2. Then going forward you can select “Favorite” at the top to quickly choose those Counterparites
    3. “All” will be sent to all Approved counterparties under Counterparty Management in your Admin Dashboard.
    4. “LPs” will be sent to Liquidity Providers provided by Paradigm

    Anonymous Toggle

    1

    Now you can send RFQs anonymously. If you don’t want the counterparties to see your desk name, toggle the “Anonymous” option to green at the bottom left of the window. Otherwise leave red if you prefer the counterparties to see your Desk name when sending the RFQ.

    Respond to an RFQ

    1

    Once you send the RFQ, it will now appear in your RFQ Board. The Status will show “Active” and the Bid/Ask fields. A spinner appears while the Taker is waiting on the Liquidity Provider(s) to respond with prices.

    2

    If you received the RFQ (you are the Maker), you will see a “Quote” button. Click that button to provide prices via the Quote modal

    3

    You will be prompted to submit a spread price or individual leg prices

    4

    Your quote will be valid for the length of time set from your Dashboard in the Product Management/Manual RFQ Section. The “Execution Window” setting there, applies to both quoting in Single-Dealer and Multi-Dealer RFQ workflows.

    5

    If your quote expires and the RFQ is still Active, Makers can continue to resend prices until the RFQ gets Filled, Trd Away, Canceled, or Expired

    6

    You can also cancel one or both side of your quote, by clicking “Kill” next to the side(s) you want to cancel

    Kill Desk Bids and Asks

    1

    These buttons will appear in in the top right corner above your RFQ board, if you or a member on your desk have one or more outstanding quotes

    2

    By selecting these appropriate buttons you can cancel all your desk’s outstanding bids, offers, or everything. This will cancel those prices, even if you did not originally send the quote

    Agreeing on a Price

    1

    As each Maker responds with a price, you as a Taker, will see the quotes aggregated and listed in order of best pricing

    2

    The Desk Ticker Name will be displayed next to each price

    3

    The Taker will have “Buy” and “Sell” buttons to click and execute.

    4

    Please note that these buttons result in one-click executions, as there will be no pop-up confirmation found in the single-dealer executions

    5

    Once a “Buy” or “Sell” button is selected, those instructions are sent to exchange to be executed and cleared automatically

    6

    The execution will hit the public Trade Table below

    6

    All details will be shown only in the two counterparties’ Trade Blotter who entered into the agreement