Quote-driven market

In quote-driven markets, traders transact with dealers or market makers who post bid and ask prices. The dealers maintain an inventory of securities. Quote-driven markets are commonly known as over-the-counter markets because securities used to be literally traded over the dealer’s counter in the dealer’s office. Now, most trades in OTC markets are conducted electronically.   Most securities other than stocks trade in quote-driven markets.

Compare: Order-driven Market, Brokered Market

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