What is "Requote" mean in CFD Trading?

Submitted by Marco on 27 March, 2008 - 09:13

I’ve been requoted while Trading CFD’s. What does that mean and why does it happen?

A requote in terms of CFD trading means that these is a deficiency of liquidity in the underlying equity so the CFD trader had to be requoted the remainder of the position that was executed in the buy or sell ticket.

Usually, the CFD provider will tell the trader that there is insufficient volume in the current market and will fill the remaining of the buy or sell order on the next order. This means that for the ticket to complete the order, their original buy or sell ticket has to be filled at different prices. Requoting usually occurs when the order placed is much larger than the market size. The requoted price is the average price paid for the ticket.

Requoting whilst trading CFDs only occurs with market makers as they may manipulate the spread on the underlying security after which the client has placed their buy or sell order ticket. (Although, the equivalent, almost similar tack is averaging up or averaging down: however requoting is done automatically and is out of your control) When you’re dealing with market makers, there is a chance that the trader will be at a disadvantage on the fill because of requoting.

Direct Market Access (DMA) CFD brokers will not requote. (check with your dealer’s Product Disclosure Statement – or better still, quiz your broker next time you call their help desk). DMA CFD dealers don’t requote for the single fact that they enact the order ticket and actually place an order on the underlying security in the market. This ensures that the CFD trder will always get market prices and not synthetically produced prices of the market maker type CFD broker.

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