Quote Driven Market & an Order Driven Market Essay
Quote-Driven Market also known as a “Price-Driven Market”.
A Quote-Driven Market is described as when registered market dealers are required to display bid prices and offer prices, and in this cases the maximum bargain size to which these prices are related. The benefit of a Quote-Driven Market is its liquidity, market makers or market dealers are required to meet orders from quotes. The drawback of this market is its lack of transparency.
Definition of Order-Driven Market
“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 is the opposite of a quote driven market, which is one that only displays bids and asks of designated market makers and specialists for a specific security.” An Order-Driven Market is described when investors submit the buy and sell orders to a central place where they are matched. The market price is derived from this constant process to match the demand with supply. The benefit of an Order-Driven Market is transparency, the orders books are displayed for the investors who wish to access the information. Mostly exchanges charge some fees for such information. On the other side, an Order-Driven Market has not the same degree of liquidity as the Quote- Driven Market. The disadvantage of Order-Driven Market is that there is no guarantee that all the orders will be executed.
The difference between a Quote-Driven Market & an Order-Driven Market Here the some difference between Order-Driven Market & Quote-Driven Market. 1The difference among these two marketing systems is based upon that what is display in the markets in term of bid and ask prices and orders. The Order-Driven Market show all of the ask and bid prices, whereas the Quote-Driven Market focus only on the asks and bids of the market dealers and other selected parties. 2An Order-Driven Market is one which all the orders of both parties (buyers and sellers) are displayed, also show the price details at which they are ready to buying or selling of a security and the security amount that they are ready to buy or sell at that price.
So, if you put an order for 50 shares of Intel at $20 per share, your order will be display in the market and all the people can be seen by this stage of information. 3The main advantage to this marketing system is transparency because it’s clearly show all the market orders and prices that people are ready to buy or sell the securities. The disadvantage of this marketing system is that there is no assurance that all the orders are executed, but in the Quote-Driven Marketing system there is the guarantee that all the orders are executed. The main disadvantage of the Quote-Driven Market is that, unlike the Order-Driven Market, it does not place the transparency in the markets.
4A Quote-Driven Market is more liquid due to occurrence of market makers or dealers but the Order-Driven Market is not more liquid.
There are markets that merge all attributes from these two marketing systems to form Hybrid Marketing Systems. Example, a market shows the current bids and asks prices of the market makers or dealers but also allow the people to look at all of the orders in the market.
Definition of Hybrid Market
“A securities exchange that facilitates trading through a blend of an automated electronic trading platform and a traditional floor broker system. Hybrid markets give brokers a choice between participating in the exchange through the traditional floor broker system, or the faster automated electronic exchange system.” Mainly, we have two options to become a member or reseller.
1 “do it all for me.”
2 “I’ll do my own mailings, but you follow up for me.”
Member in the do it all for me option get the benefit of “piggy backing” on our usual monthly mailings and we’ll just alternate new prospects and client into their client contact list for them. They can follow up with extra offers or not, because either system we’re going to be follow up with the prospect forever.
Member in the I’ll do the mailing myself option send out UBE offer to their own list or borrowed lists, and when the prospect respond they are put into our automatic Hybrid Marketing System where we following up with the prospect forever.
In both case, anything the prospect/client buy from us forever produce a 25% to75% commission for the “Ultimate Backend Member/Reseller.” The prospect/client is fixed to them forever.
Here’s the method mostly people like to look at it, member is outsourcing product formation, expert sales letter copywriting, survey and market research, all the customers following up full orders processing and all the customer service, all the cost of a onetime membership fees and a little monthly admin fees.