A quote-driven market is one where trades are made based on the quotes, or prices, set by market makers and/or specialists. These traders, representing banks and/or brokerages, are looking to fill orders and match them with other orders. They are not necessarily bound to any investor demand, as an order-driven market is, where individual investors set the prices they are looking to pay and the number of shares they seek to buy or sell.

In a quote-driven market, the dealers look to banks and brokerages for prices and investors are able to place orders either at those prices or make offers to seek negotiations. These deals may take place at a level different from the originally quoted prices, as the risk and reward for these transactions may vary in order for the dealers and specialists to turn a profit.

For the most part, bond, currency, and commodity markets operate as a quote-driven system, while stock markets tend to be either order-driven or a combination of both. Markets in developing economies may also be considered quote-driven, as investors may not have the same information or liquidity as in established regions such as the US and Europe.

The quote-driven system can provide advantages for both buyers and sellers. It can enable an investor to get a better price than the market value, if they are willing to negotiate and take on some risk. It may also offer insight into the changing demands of certain securities and markets. For sellers, it can create more stability and a more consistent flow of sales, helping to ensure a steady profit margin.

In general, quote-driven markets provide a way to facilitate the buying and selling of securities in a relatively efficient and cost-effective manner. Understanding how the system works, and how it differs between markets, is important for investors looking to make informed decisions.