Quote Driven Market

A market is described as being quote or price driven when registered market makers are required to display bid and offer prices, and in some cases the maximum bargain size to which these prices relate. The alternative trading system is an order driven market where market prices are set by the balance of supply and demand in a continuous auction. The advantage of a quote driven market is its liquidity; market makers are required to meet orders for which they provide quotes. Its disadvantage is its lack of transparency: unlike an order driven market it does not show the flow of individual orders. Examples are NASDAQ and the London Stock Exchange (LSE).