Quote Driven share dealing

Middle men known as market makers quote prices at which they are bound to buy and sell shares. Stockbrokers then do business with them on behalf of their clients private investors or institutions .

Since 20 October 1997 a date known as Big Bang 2 shares in the top 100 or so companies ceased to be traded via the quote driven mechanism but instead they are traded via an Order Driven system using the London Stock Exchanges SETS system.

The intention was that eventually nearly all shares traded on the London Stock Exchange would be via the Order Driven system. The introduction of Order Driven trading in London was necessary to prevent it from falling behind other financial centres which had traded that way for several years.

For share prices see Stockmarket.

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2009-02-17 00:00:00 © Moneyextra.com