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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. A RFQ contains at least the ISIN to uniquely identify the financial product, the type (buy/ sell), the amount, a currency, and the volume (${\displaystyle {\hbox{amount}}\times {\hbox{market price}}}$ in given currency).

Background

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:

1. 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;
2. the quote is executable exclusively by the requesting member or participant;
3. 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.

References

1. "Service and Technical Description - Request for Quote (RfQ)" (PDF). London Stock Exchange. Version 1.1. 23 Oct 2018. Retrieved 8 July 2019.
2. Bollenbacher, George. "Through a Glass Darkly – Transparency for Non-Equities Under MiFID II/MIFIR". OTC Space. Retrieved 8 July 2019.
3. "Request-for-quote (RFQ) system". www.emissions-euets.com. Retrieved 8 July 2019.

External links

The MiFID II and APA data is distributed e.g. by

• https://www.bloomberg.com/professional/product/apa/
• https://www.mds.deutsche-boerse.com/mds-de/data-services/marktdaten-in-echtzeit/deutsche-boerse-mifid-ii-apa-service
• https://www.refinitiv.com/en/mifid/solutions-and-services/apa-and-publication-services

Further reading:

• https://www.cnbc.com/2017/12/15/mifid-2-all-you-need-to-know.html ― a concise summary on the topic, understandable for laymen.

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