A quote for a bid or offer that is subject to the market maker’s/ dealer’s reconfirmation. A subject quote may be altered at the dealer’s discretion.
For example, in an out-firm quote, a dealer posts a request for quote (“offer wanted” request) and a market participants submits a “firm with recall” offer at a specific rate/ price. If in the meantime, a another market participant offers to buy the security at the same rate/ price. The second offer cannot become firm as a commitment with the first offer is still effective. The dealer, putting the other request on hold, can only respond with a “subject offer” (a provisional offer, pending confirmation or withdrawal of the first offer). Since the original offer is embedded with a recall provision, the dealer has to call the first bidder, requesting a firm response within five minutes or the offer will be cancelled. If the first bidder does not confirm the trade, the dealer can approach to the second bidder and accept its offer.
It is also known as a subject quotation or a subject quote.
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