Order Driven Market

What is an 'Order Driven Market'

An order driven market is a financial market where all buyers and sellers display the prices at which they wish to buy or sell a particular security, as well as the amounts of the security desired to be bought or sold. This is the opposite of a quote driven market, which is one that only displays bids and asks of designated market makers and specialists for a specific security.

BREAKING DOWN 'Order Driven Market'

The biggest advantage of an order driven market is transparency, since the entire order book is displayed for investors who wish to access this information. Most exchanges charge fees for such information. On the other hand, an order driven market may not have the same degree of liquidity as a quote driven market, since the specialists and market makers in the latter have to transact business at their posted bid and ask prices.

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RELATED FAQS
  1. What is the difference between a quote driven market and an order driven one?

    The difference between these two market systems lies in what is displayed in the market in terms of orders and bid and ask ... Read Answer >>
  2. What's the difference between a Nasdaq market maker and a NYSE specialist?

    What's the main difference between a specialist and a market maker? Not much. Both the New York Stock Exchange (NYSE) specialist ... Read Answer >>
  3. A _______ is a person on the trading floor of certain exchanges who holds an inventory ...

    The correct answer is d. A good example of an exchange using the specialist system is the NYSE. Each stock listed on the ... Read Answer >>
  4. Who employs the specialists at New York Stock Exchange (NYSE)? Do they work for themselves, ...

    Before we address this question, let's review what specialists do. Specialists are people on the trading floor of an exchange, ... Read Answer >>
  5. What do the bid and ask prices represent on a stock quote?

    Learn what the bid and ask prices mean in a stock quote. Find out what represents supply and demand in the stock market and ... Read Answer >>
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