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Quantitative Finance · Glossary

What is Volume commitment, shortfall penalty?

Also known as: volume commitment · shortfall penalty

Definition 23.4 The Desk and the Firm · Chapter 23 — Commercial Relationships with Venues, Brokers and Vendors

A volume commitment is a firm’s undertaking to trade, add or quote at least an agreed amount on a venue or with a counterparty over a period, in exchange for better terms. A shortfall penalty is the charge due, or the benefit forfeited, when the commitment is not met.

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