In a quote-driven market, transactions are primarily executed through?

In a quote-driven market, transactions are primarily executed through dealers. This type of market structure relies significantly on dealers who provide liquidity and facilitate trading by submitting buy and sell quotes for various securities. Dealers take on the role of intermediaries, holding inventories of assets and making markets for those assets by offering to buy and sell them at specified prices.

In contrast to auction markets, where orders are matched between buyers and sellers, quote-driven markets emphasize the role of dealers who provide quotes based on their own assessments of the market and the current inventory of securities. The involvement of dealers allows for more stable pricing and the ability for transactions to occur more rapidly, as they are ready to execute trades at their quoted bid and ask prices.

While other elements like market orders may play a role in executing transactions, the defining characteristic of a quote-driven market is the reliance on dealers who actively manage the inventory and spread risks associated with trading.