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Get Started in Shares by Glen Arnold

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So which system is best?

Supporters of the older quote-driven system say that a major problem with the order-driven system is that there may be few or no shares offered at prices close to a market clearing rate and so little trade can take place. In other words, the market can be very illiquid. There may indeed be times when no sellers are posting sensible prices and other times when buyers are scarce. This is when the quote-driven system may be more liquid because market makers who make a book in a company’s shares must continuously offer prices and are obliged to trade at the price shown.

By way of counter-criticism, it is alleged there have been times when it has been difficult to contact market makers to trade at their displayed prices, even ...

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