what is an order driven market 
an order driven market is a financial market where all buyers and sellers display the prices at which they wish to buy or sell a particular security as well as the amounts of the security desired to be bought or sold this kind of trading environment is the opposite of a quote driven market which only displays bids and asks of designated market makers and specialists for the specific security that is being traded understanding an order driven marketorder driven markets consist of a constant flow of buy and sell orders from market participants there are no designated liquidity providers and the two basic types of orders are market orders and limit orders by comparison in a quote driven market designated market makers provide bids and offers that other market participants may trade on 1the biggest advantage of participating in an order driven market is transparency since the entire order book is displayed for investors who wish to access this information most exchanges charge fees for such information on the other hand an order driven market may not have the same degree of liquidity as a quote driven market since the specialists and market makers in the latter have to transact business at their posted bid and ask prices 2stock exchanges like the new york stock exchange and the nasdaq are seen as hybrid markets a combination of both order driven and quote driven markets in order driven environments where traders can choose between market orders which require liquidity and limit orders which provide liquidity informed trading activities can actually provide a boost to liquidity 1a higher share of informed traders improves liquidity as proxied by the bid ask spread and market resiliency however informed traders have no effect on the price impact of orders compared to market orders limit orders have a smaller price impact by a factor of about four 3order driven trading systems rank buy and sell orders according to price matching the highest ranking orders if possible at the minimum order amount if there is a remaining volume of shares to be bought or sold in a given order trading systems will match the order with the next highest ranked sell or buy order the first rule in the order precedence hierarchy is price priority followed by secondary precedence rules which determine how to rank orders of the same price the first order to arrive at the best price usually has priority over other orders though sometimes trading systems trade displayed quantities before hidden quantities of the same price 4investopedia does not provide tax investment or financial services and advice the information is presented without consideration of the investment objectives risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors investing involves risk including the possible loss of principal 