Desk Pricing Is More Comparable Than It Used to Be

Desk quotes used to be opaque because comparing them required calling several desks simultaneously. That is now easier, and the effect on pricing is measurable. What follows is visible in the disclosures of a crypto OTC trading platform rather than in any announcement.

What a request for quote process looks like

You specify asset, direction and size. Several desks respond with firm prices valid for a short window. You take the best.

Some platforms automate this. Many participants do it manually with two or three relationships and a group message.

Either way, the principle is the same: quotes compared at the same moment rather than sequentially.

Why simultaneity matters

A quote is valid for seconds to a minute. Comparing one desk now and another in ten minutes compares two different market moments, not two desks.

Any comparison that is not simultaneous is measuring the market rather than the provider.

What it does to spreads

Desks quoting in competition price more tightly than desks quoting alone. This is unsurprising and the size of the effect is larger than most participants expect, particularly for clients who had a single relationship for years. The receiving side of these flows is handled by a regulated European crypto platform, already inside the framework.

The most common finding when a firm starts comparing is that its long-standing desk had drifted wider over time.

What to record

Date, asset, direction, size, mid market price at the moment of the quote, each desk’s quote, and which was taken.

Convert each to a percentage against mid. That is the comparable figure.

After twenty trades you know which desk prices your flow well at which sizes, which is information no relationship conversation will give you.

The relationship question

Comparing every trade can weaken a relationship, and relationships genuinely produce better pricing over time because a known counterparty carries less risk.

The balance that works: concentrate most flow with one or two desks, and compare periodically rather than constantly. Quarterly is enough to detect drift.

Raising a discrepancy

Present data rather than accusation. Over the last quarter our average spread with you was a certain figure and a comparison quote came in materially tighter, can you explain the difference.

Desks respond to this. One that cannot explain and does not improve has answered the question.

What justifies a wider quote

Size relative to normal depth. Volatile conditions. An illiquid asset. A direction that increases the desk’s existing position.

Each is explicable and a desk should explain it when asked. None of them is your relationship or your lack of alternatives. Coverage is narrower than most announcements imply. the list of countries covered publishes the country list.