OTC, RFQ & Block Trading in Crypto: How Institutions Execute Large Trades Without Slippage (2026)

How Institutions Execute Size, Reduce Slippage, and Protect Alpha (2026)

As crypto markets mature, how trades are executed matters as much as what is traded. For professional desks, large traders, and institutions, traditional order-book execution is often insufficient. Slippage, information leakage, and market impact can erase alpha before a strategy even begins.

This is where OTC desks, RFQ systems, and block trading become essential.

In 2026, these execution methods form a core pillar of institutional crypto trading, particularly across Asia’s high-volume, latency-sensitive markets.

Why Institutions Don’t Trade Size on Order Books

Central limit order books (CLOBs) are transparent by design. That transparency becomes a liability when trading size.

Problems with executing large trades on CLOBs:

Slippage from thin top-of-book liquidity
Front-running and signaling risk
Partial fills during volatility
Adverse price movement before completion

For professional traders, execution is not about immediacy — it is about certainty of outcome.

OTC and RFQ execution provide that certainty.

What OTC Trading Means in Crypto

OTC (Over-the-Counter) trading refers to bilateral execution negotiated off the public order book.

Key characteristics:

Trades are priced privately
Size does not impact public markets
Settlement is agreed upfront
Counterparty selection is critical

OTC is primarily used for:

Large spot transactions
Treasury rebalancing
Strategic entries or exits
Capital deployment by funds

OTC trading is about minimising market impact, not speed.

RFQ: The Institutional Standard for Derivatives Execution

RFQ (Request for Quote) execution sits between OTC and order books.

How RFQ works:

Trader requests a quote for a specific size
Liquidity providers respond privately
Best quote is accepted or rejected
Trade executes instantly at agreed price

RFQ is commonly used for:

Futures and perpetuals
Options
Basis legs
Hedging flows

RFQ has become the preferred execution method for institutional derivatives trading.

Block Trading: Executing Size Without Signaling

Block trading allows large trades to be executed as a single transaction at a negotiated price.

Advantages:

No order-book footprint
Reduced slippage
Minimal information leakage
Faster execution for size

Block trades are widely used for:

Basis strategies
Rebalancing
Portfolio hedging
Options delta hedges
For institutions, block trading is not optional — it is risk control.

OTC vs RFQ vs CLOB: Execution Comparison

Professional desks use all four, depending on intent.

Pricing Mechanics: How OTC and RFQ Quotes Are Formed

OTC and RFQ pricing typically references:

Spot index prices
Futures curves
Funding rates
Volatility (for options)
Liquidity conditions

Spreads widen during:

High volatility
Thin liquidity
Large notional size

Good desks negotiate execution quality, not just price.

Settlement & Collateral Considerations

Execution is only half the trade. Settlement matters.

Institutional desks evaluate:

Settlement timing
Margin requirements
Stablecoin exposure
Counterparty reliability

Most OTC and RFQ trades are settled in USDT or USDC, making stablecoin risk management critical.

Where Institutions Execute OTC, RFQ & Block Trades

Centralised Exchanges With Block / RFQ Support

These venues are commonly used by professional traders for large execution:

These platforms offer:

Deep liquidity
Block trade facilities
Institutional APIs
Multi-asset coverage

Options RFQ & Block Execution

For options, liquidity is highly concentrated.

Deribit is the institutional standard for BTC & ETH options

Most options block trades and RFQ flows are routed through Deribit, with delta hedging executed elsewhere.

OTC in Asia: Why the Region Dominates

Asia leads global OTC and RFQ crypto flows due to:

Concentration of prop trading firms
High-frequency derivatives activity
Large family office capital pools
Flexible execution preferences

Hong Kong, Singapore, and offshore desks form a liquidity corridor that quietly moves size without disturbing public markets.

Operational Risks Institutions Actively Manage

OTC and RFQ execution reduces market risk — but introduces other risks.

Key considerations:

Counterparty vetting
Credit exposure
Settlement delays
Documentation and confirmations

Professional desks treat OTC execution as a relationship business, not a transactional one.

FAQs – Institutional Execution Edition

Is OTC trading cheaper than order-book trading?
Often yes for large size, when slippage is considered.

Is RFQ faster than CLOB execution?
For size, yes. RFQ provides instant price certainty.

Do retail traders need OTC execution?
Usually not. OTC is designed for size.

Is counterparty risk real?
Yes. It must be managed actively.

Final Takeaway

In 2026, execution quality is alpha.

Institutions that rely solely on public order books:

Leak information
Suffer slippage
Lose edge

Those that master OTC, RFQ, and block execution trade quietly, efficiently, and at scale — preserving returns that others give away to the market.

This is how professional crypto trading actually works.