CFA Level I · CFA Level I Exam · Fixed-Income Issuance and Trading
Compared with a quote-driven dealer market, an order-driven electronic trading system for bonds is most likely to:
An order-driven electronic system matches buy and sell orders from participants using set rules such as price and time priority. Committing dealer capital to every trade describes quote-driven markets, and large orders are not guaranteed execution at the best displayed price because of limited depth.
- Arely on dealers to commit their own capital to every trade
- Bmatch buy and sell orders submitted by participants using trading rulesCorrect
- Cguarantee execution of large orders at the best displayed price
Explanation
An order-driven system matches buy and sell orders according to rules such as price and time priority. Dealer capital commitment characterizes quote-driven markets, and large orders are not guaranteed execution at the best price because displayed depth is limited.
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