A Request for Quote (RfQ) is a financial term for certain way to ask a bank for an offer of a given financial instrument from a bank, made available by so-called Approved Publication Arrangement (APA) by the stock markets itself or by Financial data vendors as required in Europe by MiFID II and in effect since January 2018. [1] A RFQ contains at least the ISIN to uniquely identify the financial product, the type (buy/ sell), the amount, a currency, and the volume ( in given currency).
In the wake of the 2007-09 financial crisis there was an initiative to create more pre-trade transparency, for which it is essential to know who is requesting which financial product. [2]
Article 1(2) of the Commission Delegated Regulation (EU) 2017/583 of 14 July 2016 (which supplements Regulation (EU) No 600/2014 of the European Parliament and of the council on markets in financial instruments) defines: [3]
A request-for-quote (RfQ) system is a trading system where the following conditions are met:
- a quote or quotes by a member or participant are provided in response to a request for a quote submitted by one or more other members or participants;
- the quote is executable exclusively by the requesting member or participant;
- the requesting member or market participant may conclude a transaction by accepting the quote or quotes provided to it on request.
This essentially means, that everybody buying or selling stocks, bonds, foreign exchange, commodities or exchange-traded funds (ETFs) will (automatically) generate an RfQ before the trade is settled.
In finance, a derivative is a contract that derives its value from the performance of an underlying entity. This underlying entity can be an asset, index, or interest rate, and is often simply called the underlying. Derivatives can be used for a number of purposes, including insuring against price movements (hedging), increasing exposure to price movements for speculation, or getting access to otherwise hard-to-trade assets or markets.
The Frankfurt Stock Exchange is the world's 12th largest stock exchange by market capitalization. It has operations from 8:00 am to 10:00 pm.
The bid–ask spread is the difference between the prices quoted for an immediate sale (ask) and an immediate purchase (bid) for stocks, futures contracts, options, or currency pairs in some auction scenario. The size of the bid–ask spread in a security is one measure of the liquidity of the market and of the size of the transaction cost. If the spread is 0 then it is a frictionless asset.
An electronic communication network (ECN) is a type of computerized forum or network that facilitates the trading of financial products outside traditional stock exchanges. An ECN is generally an electronic system that widely disseminates orders entered by market makers to third parties and permits the orders to be executed against in whole or in part. The primary products that are traded on ECNs are stocks and currencies. ECNs are generally passive computer-driven networks that internally match limit orders and charge a very small per share transaction fee.
In finance, market depth is a real-time list displaying the quantity to be sold versus unit price. The list is organized by price level and is reflective of real-time market activity. Mathematically, it is the size of an order needed to move the market price by a given amount. If the market is deep, a large order is needed to change the price.
Xetra is a trading venue operated by the Frankfurt Stock Exchange based in Frankfurt, Germany.
Markets in Financial Instruments Directive 2014, commonly known as MiFID 2, is a legal act of the European Union (EU). Together with Regulation No 600/2014 it provides a legal framework for securities markets, investment intermediaries, in addition to trading venues. The directive provides harmonised regulation for investment services of the member states of the European Economic Area — the EU member states plus Iceland, Norway and Liechtenstein. Its main objectives are to increase competition and investor protection, as well as level the playing field for market participants in investment services. It repeals Directive 2004/39/EC.
European Energy Exchange (EEX) AG is a central European electric power and related commodities exchange located in Leipzig, Germany. It develops, operates and connects secure, liquid and transparent markets for energy and related products, including power derivative contracts, emission allowances, agricultural and freight products.
NYSE Euronext, Inc. was a transatlantic multinational financial services corporation that operated multiple securities exchanges, including the New York Stock Exchange, Euronext and NYSE Arca. NYSE merged with Archipelago Holdings on March 7, 2006, forming NYSE Group, Inc. On April 4, 2007, NYSE Group, Inc. merged with Euronext N.V. to form the first global equities exchange, with its headquarters in Lower Manhattan. The corporation was then acquired by Intercontinental Exchange, which subsequently spun off Euronext.
The Kazakhstan Stock Exchange is a stock exchange located in Almaty, Kazakhstan. The exchange was founded in 1993.
A multilateral trading facility (MTF) is a European Union regulatory term for a self-regulated financial trading venue. These are alternatives to the traditional stock exchanges where a market is made in securities, typically using electronic systems. The concept was introduced within the Markets in Financial Instruments Directive (MiFID), a European Directive designed to harmonise retail investors protection and allow investment firms to provide services throughout the EU.
Matchbook FX was an internet-based electronic communication network for trading currency online in the Spot-FX or foreign exchange market. It operated between 1999 and 2002.
Börse Stuttgart (SWB) is a stock exchange in Germany, the second largest in the country and the ninth largest in Europe.
The European Securities and Markets Authority (ESMA) is an independent European Union Authority located in Paris.
Tradeweb Markets Inc. (Tradeweb) is an international financial services company that builds and operates electronic over-the-counter (OTC) marketplaces for trading fixed income products, ETFs, and derivatives. The company was co-founded in 1996 by Lee Olesky and Jim Toffey. Its customers include banks, asset managers, central banks, pension funds and insurance companies.
Research Exchange Ltd is a FinTech company servicing the global asset management industry operating under the trading name RSRCHXchange. Its platform, RSRCHX, is an online marketplace for unbundled financial research. RSRCHX provides asset management firms with a cloud-based repository of reports. Launched in September 2015, RSRCHX incorporates elasticsearch, compliance checks and Commission Sharing Agreement (CSA) and credit card payment administration. RSRCHXchange is one of a number of FinTech start-ups offering products which relate to MiFID II, the European Union financial reforms intended as a response to the financial crisis to improve the functioning of financial markets and enhance investor protection. RSRCHXchange's technology differs from other financial services vendors because its research catalogue is not dependent on RIXML, the industry-developed language for tagging documents. RSRCHXchange specialises in research unbundling, one of the most contentious topics of the regulation.
MarketAxess Holdings Inc. (MarketAxess) is an international financial technology company that operates an electronic trading platform for the institutional credit markets, and also provides market data and post-trade services. It enables institutional investors and broker-dealers to trade credit instruments, including corporate bonds, and other types of fixed income products.
With MiFID II directive being in force in January 2018, Approved Publication Arrangements (APA) data should increase transparency in the OTC markets by publishing quotes for pre-trade transparency, and trades for post-trade transparency. An APA is an organisation authorised to publish trade reports on behalf of investment firms according to Article (4)(1)(52) MiFID II.
Stock market equivalence is granted by the European Union to those countries whose stock markets are deemed to be 'equivalent' to those of the EU countries. On 3 January 2018, the EU implemented the "Markets in Financial Instruments Directive II" which required all European investment firms & traders to trade the shares of a company listed in the EU on a stock exchange within the EU or an equivalent third country exchange. In order to gain equivalence, the trading venues of the concerned country should have a high level of investor protection and sound mechanisms to deal with insider trading. The main purpose of this measure is to protect the interests of investors based in the EU. Analysts have called it a pioneer in financial regulation with the potential to restructure the global financial system. As of 1 July 2019, only three jurisdictions had been granted equivalence: the United States of America, Australia and Hong Kong. Switzerland too was granted equivalence, but only temporarily, and the EU announced in early May 2019 that it would not renew equivalence for Switzerland after 1 July 2019. This was part of the wider Swiss-EU trade dispute.
The MiFID II and APA data is distributed e.g. by
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