On Exchange

DEFINITION of On exchange

On-exchange – this means that trade is taking place directly on an order book. It differs from a quote, which is a trade made at the price which the market maker is quoting.


Some exchange’s dealing services search various market makers for the best on market prices. Then it displays the best possible price at which a trade can be made. This direct market access is the way of trading on the exchange. It allows traders to see the various prices offered on an exchange and identify which prices are best.

When some trade is on exchange it means that trade is taking place directly on an order book. The order book is not an actual “book,” that you can flip open and shut, etc.

Trading book is a synonym for a trading portfolio. “I was given my own trading book” which means the firm gave the trader an allocation of capital with which to invest and trade. The trader will have a decent part of autonomy and he typically takes full accountability for the risks and rewards of his investments.

Novice traders typically don’t have trading books since they are still learning. As traders progress over the years, they will have more and more autonomy and their trading “book” will grow.

Something you might hear is “we have a 10-billion dollar trading book.” That number just represents the size of their portfolio/balance sheet. It means they have 10 billion dollars of capital that they can put to work.


For example, you are the buyer or seller, and the market maker is the other party in the transaction. However, it is important to exist only one report.

The stock exchanges are publishing the transaction reports. On-exchange means those plans that are available on the public market only.