Training: OTC-Trading – Quote Requests (information)

Short description

Provide a quotation upon request of a client or another market participant.
This simulation mimics the fundamentals of the trading environment and market activity. Focus is only on relevant aspects so that you cannot be distracted by (currently) irrelevant aspects. The modular setup of this simulation allows therefore for gradually grasping one concept or process after another, making it very suitable for non-traders. Actually, it is suitable for all professionals with a role in (or relating to) the wholesale commodity or energy markets. It is very suitable for non-traders as terminology is covered on the go, thereby intuitively embedding concepts and processes.

Capacity

You act in the role of a broker-dealer; alternatively, you act in the capacity of a market maker or liquidity provider.

Task

You can start the way you please. Transact whatever you like, the way you like. At a certain stage you will be contacted by phone. The phone is picked up automatically. You will be asked to provide a price quotation. Make sure you enter both a bid and an offer (i.e. the combination of a price at which you want to buy and a price at which you want to sell, concerning a certain volume) and, then, submit. Note that the quotation has to be at market (i.e. market conformity).

Objective

The aim of this simulation is to familiarise with liquidity provision / market making and to apply what you have learnt so far in the field of pricing.

Conclusion

At the end of the simulation, your performance is analysed. See how you have done and try again, if need be. To assess your performance the following rules are considered:
YOUR BID price must be lower than YOUR ASK price.
YOUR BID > MARKET BID minus the MARKET Bid-Ask Spread (at the moment of submission).
YOUR ASK < MARKET ASK plus the MARKET Bid-Ask Spread (at the moment of submission).