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Get Started in Shares by Glen Arnold

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Order-driven trading

Order-driven trading is where buyers (via brokers) trade with sellers at a single price so that there is no bid–offer spread. Prices from those willing to buy or sell are displayed electronically and buyers and sellers are matched electronically. The big advantage with this system is that prices are transparent and available to everyone with access to this type of information. The disadvantage is that there is no guarantee that buy and sell orders can be matched, whereas trading through a market maker guarantees execution of the deal.

Most stock exchanges in the world now operate order-driven systems (sometimes called matched-bargain systems or order book trading). The LSE has SETS (Stock Exchange Electronic Trading System ...

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