A trade execution model falls on a transparent system resembles with customer orders (bids and offers) on a price/time priority ’ basis is called central limit order book (CLOB).
Outstanding offers for purchase and sale are stored in a row and filled in a priority order according to price and entry time.
Price / Time Priority Principle refers to how orders are prioritized for execution.
First of all orders are ranked as per their prices. Then orders of the same price are then ranked depending on when they were entered.
The highest (“best”) bid order and the lowest (“cheapest”) offer order constitutes the best available market price.
Customers can cross the bid/ask spread and benefit from low-cost execution on regular basis. (You’re able to enter limit orders “in between” the bid and ask.)
They can also view the depth of the market or "stack" in which customers can see bid orders for different sizes and prices on the one hand and offer orders at different sizes and prices on the other.
By definition, CLOB is fully transparent, real-time, anonymous, and low cost in execution.
The use of a CLOB is common for highly standardized securities and small trade sizes.
In the CLOB model, customers can trade directly with dealers; dealers can trade with other dealers.
And most importantly, customers can trade directly with other customers anonymously.

CLOB vs. RFQ

Contrary tothe CLOB approach is the Request For Quote (“RFQ”) trading method.
RFQ is an asymmetric trade execution model.
In this method, a customer queries a finite set of participant market makers who quote a bid/offer (“a market”) to the customer.
The customer may only “hit the bid” (sell to the highest bidder) or “lift the offer” (buy from the cheapest seller).
The customer is prohibited from stepping inside the bid/ask spread and trying to reduce their execution fees.
Contrary to the CLOB model, customers can only trade with dealers. They can not trade with other customers.
Significantly, they cannot make markets themselves.
The cost of commercial execution is lower when more market participants can compete for the flow of orders as opposed to when orders are sent to a limited number of market makers with (possibly) non-competitive references.

A

Abandoned Baby | Account Statement Report | Account Value | Accumulation Area | Accumulative Swing Index ASI | Address | ADDY | ADP National Employment Report | Advance Or Decline Index | Afghanistan Afghanis | Agency Model | Aggressor | Alan Bollard | Alan Greenspan | Albania Leke | Algerian Algeria Dinars | Alligator | Altcoin | Analysts | Andrews Pitchfork | Angela Merkel | Angola Kwanza | Anti Money Laundering AML | ANZ Commodity Price Index | Application Programming Interface API | Appreciation | Arbitrage | Argentina Pesos | Armenian Drams | Aroon Oscillator | Aroon Up And Down | Aruban Guilder | Ascending Channel | Ascending Trend Line | Ascending Triangle | ASIC Mining | Asset | Asset Purchase Programme APP | Asset Purchases | Asymmetric Encryption | Asymmetric Slippage

B

Bag | Bag Holder | Bahmas Dollars | Bahrain Dinars | Bail In | Bail Out | Balance Of Trade | Baltic Dry Index | Bangladesh Taka | Bank Levy | Bank Of Canada BOC | Bank Of England BOE | Bank Of International Settlement BIS | Bank Of Japan BoJ | Bank Run | Bank Run | Banking Institutions | Bar Chart | Barbados Dollars | Base Currency | Base Rate | Basing | Basing Point | Bear | Bear Flag | Bear Market | Bear Trap | Bearish | Binary Options | Bitcoin Cash | Bitcoin Maximalist | Bitcoin Or BTC | Block | Block Explorer | Block Header | Block Height | Block Reward | Blockchain | Blue Chip | Bolivia Bolivianos | Bollinger Bands | Bond | Bond Auction | Bond Yeild | Book | Boris Schlossberg | Botswana Pulas | Brazilian Brazil Real | Breakdown | Breakeven | Breakout | Brent Crude | Bretton Woods Agreement Of 1944 | BRIC | Broadening Formation | Broker | BTD | BTFD | Bucket Shop | Bulgarian Leva | Bull | Bull Flag | Bull Market | Bull Trap | Bullish | Bullish Engulfing Pattern | Bundesbank | Burundi Francs | Business Inventories | Buy Side | Buying Pressure

C

Cable | Camarilla Pivot Points | Cambist | Cambodian Riels | Canadian Dollar | Cape Verde Escudos | Carbon Credits | Cardano ADA | Carry Trade | Cash Market | Catalyst | Cayman Islands Dollars | Cboe Eurocurrency Volatility Index | Central Bank | Central Bank Digital Currency | Central Bank Intervention | Central Counterparty Clearing Houses CCPs | Central Limit Order Book Or CLOB | Chaikin Oscillator | Chart Pattern | Chartist | Chicago PMI | Chilean Peso | Chinese Renminbi | Chinese Yuan | Christine Lagarde | Circulating Supply | Cleared Funds | Clearing | Clearing Price | Client | Closed Position | Cloud Mining | Coin Age | Cold Storage | Collateral | Colombian Pesos | Comdoll | Commercial Corporations | Commission | Commitments Of Traders Report Or COT | Commodity | Commodity Channel Index Or CCI | Commodity Futures Trading Commission CFTC | Commodity Research Bureau Index | Commodity Trading Advisor CTA | Communaute Financiere Africaine Francs | Comoros Francs | Completeness | Compound COPM | Comptoirs Francais Du Pacifique Francs | Conference Board Consumer Confidence Index CCI | Confirmation | Confluence | Congo Congolese Francs | Consensus Algorithm | Consolidation | Consumer Price Index CPI

E

Economic Indicators