Crypto Derivatives Exchange PowerTrade Launches RFQs for Institutional Options Trading

PowerTrade, a crypto exchange focused on derivatives, is rolling out a request-for-quote (RFQ) model for the options market, which it says will cater to institutional investors by mirroring a widely used practice in traditional finance.

The exchange, which is available as a mobile and web-based application, is the latest to launch an RFQ model. Institutional players tend to prefer to trade options as multi-leg RFQs as they allow investors to buy and sell assets in bulk. Generally speaking, an RFQ is when an investor asks brokers or market makers to bid on a trade.

Other exchanges such as Paradigm and Dfyn have launched RFQs in the past. Deribit, the world’s largest bitcoin and ether options exchange offers a similar option called “COMBOS”.

The RFQ workflow goes as follows:

  • Client A sends an RFQ, which is then visible to all market makers, including any other client that wants to show a quote.
  • PowerTrade’s options market maker sends a two-way quote (bid/offer) back to client A.
  • Client A or any other client who is logged into the exchange can trade on the quote, and the trade settles on the platform.

Proponents say that RFQs allow users to gain access to better prices, particularly for medium and high-volume trades.

“Our goal with RFQ is to drive the adoption of the crypto options markets by supporting smaller institutional traders with no minimum order sizes,” said Bernd Sischka, head of institutional sales at PowerTrade, in an interview with CoinDesk. “We are tackling key problems in the crypto derivatives industry that are impeding rapid adoption of these products amongst the traditional finance clients.”

PowerTrade says its investors include Pantera Capital, Ledger Prime and QCP Capital.