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
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.
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:
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.
- ^“Service and Technical Description – Request for Quote (RfQ)” (PDF). London Stock Exchange. Version 1.1. 23 Oct 2018. Retrieved 8 July 2019.
- ^Bollenbacher, George. “Through a Glass Darkly – Transparency for Non-Equities Under MiFID II/MIFIR”. OTC Space. Retrieved 8 July 2019.
- ^“Request-for-quote (RFQ) system”. www.emissions-euets.com. Retrieved 8 July 2019.
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.