Order Driven Market Australia: How It Works in 2025

Order driven markets are fundamental to the way most Australian securities are traded today. But as regulatory shifts and technology continue to reshape the landscape in 2025, understanding how these markets work—and how they differ from quote driven systems—has never been more important for investors and traders alike.

What Is an Order Driven Market?

An order driven market is a trading system where all buy and sell orders are publicly displayed and matched according to price and time priority. Unlike quote driven markets, where dealers set bid and ask prices, order driven systems rely on the collective action of buyers and sellers to determine prices. The Australian Securities Exchange (ASX) is a prime example, running on a fully electronic, order driven model for equities and many derivatives.

• Transparency: All bids and offers are visible in the order book.
• Price Discovery: Market prices emerge organically from the interaction of supply and demand.
• No Intermediaries: Trades are matched directly between buyers and sellers, reducing reliance on market makers.

For instance, if you place a limit order to buy shares of CSL at $295, it will sit in the order book until a seller matches your price—no dealer sets the price for you.

Order Driven Markets in Australia: 2025 Updates and Trends

The ASX’s order driven platform has seen substantial upgrades in 2025. The most notable change is the ongoing rollout of the CHESS replacement project, which aims to further streamline settlement and enhance transparency for both retail and institutional traders. In addition:

• Real-time settlement updates: Investors now receive near-instant confirmation of trades, reducing settlement risk.
• Algorithmic trading enhancements: Upgrades to ASX’s matching engine have enabled more sophisticated order types and faster processing, benefiting high-frequency traders and fund managers.
• Regulatory adjustments: ASIC’s new rules in 2025 require greater disclosure of off-market transactions, making the central order book even more critical for price discovery.

These changes aim to level the playing field. For example, the enhanced transparency has made it harder for ‘dark pools’—private exchanges—to influence public market prices, benefiting everyday investors who rely on the visible order book.

How Order Driven Markets Impact Aussie Investors

Order driven markets empower investors with:

• Greater control: You can set exact buy or sell prices using limit orders, rather than accepting whatever price a dealer quotes.
• Lower costs: Reduced reliance on intermediaries can mean lower spreads and fewer hidden fees.
• Improved fairness: Public visibility of the order book means all participants see the same information, helping reduce information asymmetry.

However, these benefits come with new challenges. Large orders can still ‘move the market’ if there isn’t enough liquidity at certain price levels. And while transparency aids price discovery, it can also expose trading strategies to competitors, especially for institutions managing big positions.

In 2025, new ASX features like iceberg orders (which allow traders to hide a portion of their order) and enhanced pre-trade anonymity help address these concerns, making the market more resilient and user-friendly.

Order Driven vs. Quote Driven: Why It Matters Now

Australia’s order driven approach stands in contrast to quote driven systems still used in some overseas markets, such as certain OTC bond or commodities exchanges, where dealers or market makers set prices. For most Australian investors, the order driven model offers:

• Better transparency and price discovery
• Lower barriers to entry for new participants
• Alignment with global best practices

With new regulatory frameworks and tech upgrades in 2025, the gap between Australia’s order driven markets and less transparent alternatives is wider than ever—making it crucial to understand how your trades are executed and how you can take advantage of the tools now available.