Quote Driven Market


DEFINITION of 'Quote Driven Market'

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.

BREAKING DOWN 'Quote Driven Market'

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.

  1. Dealer

    A person or firm in the business of buying and selling securities ...
  2. Order Driven Market

    A financial market where all buyers and sellers display the prices ...
  3. Ask

    The price a seller is willing to accept for a security, also ...
  4. Specialist

    A member of an exchange who acts as the market maker to facilitate ...
  5. Market Maker

    A broker-dealer firm that accepts the risk of holding a certain ...
  6. Bid

    1. An offer made by an investor, a trader or a dealer to buy ...
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  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 Full Answer >>
  2. Do penny stocks trade after hours?

    Penny stocks are common shares of public companies that trade at a low price per share. These companies are normally small, ... Read Full Answer >>
  3. Where do penny stocks trade?

    Generally, penny stocks are traded through the use of the Over the Counter Bulletin Board (OTCBB) and through pink sheets. ... Read Full Answer >>
  4. Where can I buy penny stocks?

    Some penny stocks, those using the definition of trading for less than $5 per share, are traded on regular exchanges such ... Read Full Answer >>
  5. How does the stock market react to changes in the Federal Funds Rate?

    The stock market reacts to changes in the federal funds rate in various ways depending on where it is in the business cycle. ... Read Full Answer >>
  6. How do I place an order to buy or sell shares?

    It is easy to get started buying and selling stocks, especially with the advancements in online trading since the turn of ... Read Full Answer >>

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