The two-way range order is probably the most unusual mechanism I've come across while reading about @TermMax .
It isn't just a lending order.
It can contain both borrowing and lending curves.
That means the order setter can interact with whichever side of the market gets matched.
This creates an interesting type of conditional capital allocation.
Instead of deciding in advance that the capital will only be used for lending, the strategy can respond to which curve gets filled.
But flexibility comes with a cost.
The accounting becomes more complicated.
The participant has to understand what happens when one side is filled, how the position changes, and how settlement works later.
That's why I wouldn't describe the mechanism simply as “more efficient.”
It is more FLEXIBLE.
Whether that flexibility translates into better outcomes depends on execution and market conditions.
The design is worth studying on its own.
#TermMax
It isn't just a lending order.
It can contain both borrowing and lending curves.
That means the order setter can interact with whichever side of the market gets matched.
This creates an interesting type of conditional capital allocation.
Instead of deciding in advance that the capital will only be used for lending, the strategy can respond to which curve gets filled.
But flexibility comes with a cost.
The accounting becomes more complicated.
The participant has to understand what happens when one side is filled, how the position changes, and how settlement works later.
That's why I wouldn't describe the mechanism simply as “more efficient.”
It is more FLEXIBLE.
Whether that flexibility translates into better outcomes depends on execution and market conditions.
The design is worth studying on its own.
#TermMax