Legal Definitions - matched order

A matched order occurs when a buy order and a sell order for the same financial instrument, commodity, or currency, specifying the identical quantity and price, are successfully paired and executed on an exchange or trading platform. This pairing facilitates the completion of a transaction between a buyer and a seller without direct negotiation, relying instead on the automated systems of the market.

• Example 1 (Stock Market):

  An individual investor places an order to buy 150 shares of "Global Tech Solutions Inc." at exactly $120.75 per share. Simultaneously, a pension fund places an order to sell 150 shares of "Global Tech Solutions Inc." at the very same price of $120.75 per share. The stock exchange's trading system identifies these two complementary orders – one to buy, one to sell, for the identical quantity and price – and pairs them together, resulting in a matched order and the immediate execution of the trade.

• Example 2 (Commodities Market):

  A large food processing company submits an order on a commodities exchange to sell 5,000 bushels of wheat for delivery in the upcoming harvest month at $6.50 per bushel. At the same time, a bakery chain submits an order to buy 5,000 bushels of wheat for the same delivery month and at the identical price of $6.50 per bushel. These two orders perfectly align in terms of the commodity (wheat), quantity, delivery terms, and price. The exchange's system matches them, creating a matched order that completes the transaction between the seller and the buyer.

• Example 3 (Foreign Exchange Market):

  A bank places an order on a foreign exchange platform to sell 2 million Euros (EUR) and buy Japanese Yen (JPY) at an exchange rate of 130.50 JPY per EUR. Concurrently, a large import-export business places an order to buy 2 million EUR and sell JPY at the exact same rate of 130.50 JPY per EUR. Since both orders specify the same currency pair, quantity, and exchange rate, the trading platform identifies them as a matched order. This allows the immediate execution of the currency exchange, fulfilling both parties' financial requirements.