What best describes a broker-driven market?

A broker-driven market is characterized by brokers acting as intermediaries between buyers and sellers. This means that the brokers facilitate transactions by finding counterparties for their clients' buy or sell orders, providing liquidity to the market. In such markets, brokers play a crucial role in ensuring that trades are executed efficiently and that clients get the best possible prices based on the current market conditions.

The presence of brokers helps to streamline transactions, as they typically have access to a wide range of market participants, enabling them to match orders more effectively. This function contrasts with other types of markets where the matching of orders might occur in a different manner, such as in an auction system or where trades happen directly between buyers and sellers without an intermediary.

Understanding the role of brokers in this context highlights the importance of their services in providing a structured trading environment, improving price discovery, and enhancing market efficiency.