1+2 bond buy/sell trade flows (offer/bid..)

For a muni bond dealer, there’s just 1 way to sell and 2 ways to buy.

Dealers sell via _advertising_ i.e. publishing offers. Price is fixed. Quantity limit is fixed too. Clients can trade any quantity within the limit.

Similarly, dealers can buy via advertising i.e. publishing fully-disclosed bids. Price is fixed. Quantity limit is fixed too. Clients can trade any quantity within the limit.

Buyers more often initiate a buy via RFQ (bid-wanted). Buyer sends an RFQ (Bid Request) for a given quantity. A dealer (among other dealers) responds with Bid-Answer along with a final price. If he likes a particular bid answer (or “bid”), buyer sends an order.

In all 1+2 cases, price is decided by the dealer.

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