Quote Driven Market

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DEFINITION

An electronic stock exchange system in which prices are determined from bid and ask quotations made by market makers, dealers or specialists. In a quote driven market, also known as a price driven market, dealers fill orders from their own inventory or by matching them with other orders. A quote driven market is the opposite of an order driven market, which displays individual investors' bid and ask prices and the number of shares they want to trade.

INVESTOPEDIA EXPLAINS

Order execution is not guaranteed in an order driven market, but it is guaranteed in a quote driven market because market makers are required to meet the bid and ask prices they quote. A quote driven market is more liquid but lacks transparency. A hybrid market combines the features of both quote driven and order driven markets. The NYSE and Nasdaq are both considered hybrid markets.


RELATED TERMS
  1. Dealer

    A person or firm in the business of buying and selling securities for their ...
  2. Ask

    The price a seller is willing to accept for a security, also known as the offer ...
  3. Bid

    1. An offer made by an investor, a trader or a dealer to buy a security. The ...
  4. Market Maker

    A broker-dealer firm that accepts the risk of holding a certain number of shares ...
  5. Order Driven Market

    A financial market where all buyers and sellers display the prices at which ...
  6. Specialist

    A member of an exchange who acts as the market maker to facilitate the trading ...
  7. Bidder

    The party offering to buy an asset from a seller at a specific price. A bidder ...
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