During continuous trading, where is a quote matched when it meets an order?

During continuous trading, where is a quote matched when it meets an order?

• A. At quote (Quote domination rule)
• B. At limit
• C. At quote already in order book
• D. At reference price

Answer: (A)

In continuous trading, quotes in the order book set the prices at which trades can occur. When an incoming order is marketable against the current best quote, the match happens at the price of that quote. This is the quote domination rule: the quote price dominates the execution price. So a buy order that hits the best offer executes at that offer price, and a sell order that hits the best bid executes at the bid price. The incoming order’s own limit only matters for passive resting orders, not for this matching scenario. Executions are not driven by a reference price in this standard process.

In continuous trading, quotes in the order book set the prices at which trades can occur. When an incoming order is marketable against the current best quote, the match happens at the price of that quote. This is the quote domination rule: the quote price dominates the execution price. So a buy order that hits the best offer executes at that offer price, and a sell order that hits the best bid executes at the bid price. The incoming order’s own limit only matters for passive resting orders, not for this matching scenario. Executions are not driven by a reference price in this standard process.