What are Matching Systems?
Matching systems are alternative trading systems which automatically match bids and offers to execute trades. They are widely owned by institutional traders, market makers, banks, money managers and other financial firms to create an alternative trading environment. Instead of continuous order execution, as in major exchanges, matching systems often follow periodic execution sessions.
Most matching systems allow traders to place their orders anonymously through specific protocols. The system will evaluate the order and route that to appropriate cross-matching engine, which handle order executions of specific symbols. If matching counterpart order is there, the orders are executed instantaneously. If no matching order, then the ask/bid order is displayed to all traders involved to place matching orders. Orders are usually executed on a time-priority basis.
Matching systems are often less susceptible for price manipulations 1) as trades are done anonymously and 2) as trades are done purely in a quote-driven environment. All trades are done electronically usually without broker involvement. Usually there will be minimum order size requirements (eg: 10,000 shares). Most matching systems derive ask and bid prices passively from NBBO (National Best Bid and Offer).
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Most matching systems allow traders to place their orders anonymously through specific protocols. The system will evaluate the order and route that to appropriate cross-matching engine, which handle order executions of specific symbols. If matching counterpart order is there, the orders are executed instantaneously. If no matching order, then the ask/bid order is displayed to all traders involved to place matching orders. Orders are usually executed on a time-priority basis.
Matching systems are often less susceptible for price manipulations 1) as trades are done anonymously and 2) as trades are done purely in a quote-driven environment. All trades are done electronically usually without broker involvement. Usually there will be minimum order size requirements (eg: 10,000 shares). Most matching systems derive ask and bid prices passively from NBBO (National Best Bid and Offer).
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by Daniel Pipitone at
5:51 AM
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