Number: RS20631
Title: THE CENTRAL LIMIT ORDER BOOK (CLOB) OPTION FOR LINKING U.S. STOCK MARKETS
Authors: Gary Shorter, Government and Finance Division 
Abstract: A central limit order book, or "CLOB," is a policy option currently under consideration by the Securities and Exchange Commission. A CLOB is an electronic system that would like the various stock markets (exchanges, market makers, and alternative systems) in an attempt to correct some of the problems that have emerged because of the proliferation of trading venues in recent years. As envisioned by some, a CLOB could allow the centralized display of investors' offers to trade stocks which are listed on various stock exchanges. CLOBs also tends to be conceptualized as an order display device that would allow those who first submit a stock trade to receive execution priority over similar, but subsequent orders. CLOB detractors, however, say that it could impede innovation and subject U.S. stock markets to systemic risk. This report examines these issues.
Pages: 6
Date: Updated January 26, 2001