Matching Orders

Matching orders are opposite requests for a security or derivative at the same price. If one investor wants to buy a quantity of stock and another wants to sell the same quantity at the same price, their orders match and a transaction is made. The work of pairing these orders is the process by which exchanges match buy orders, or bids, with sell orders, or asks, to execute securities trades. Most securities exchanges match orders using computer algorithms. Historically, brokers matched orders through face-to-face interactions on a trading floor in an open-outcry auction. Since 2010 all major markets have transitioned to electronic matching.