What defines order-driven markets?

Order-driven markets are characterized by the presence of public limit orders, which play a crucial role in defining the transaction processes within these markets. In such markets, the prices are primarily determined by the orders placed by participants rather than by market makers or dealers.

When a limit order is submitted, it specifies the price at which a trader is willing to buy or sell an asset. These orders are visible to all market participants, and trades occur when there is a match between buyers’ limit orders and sellers’ limit orders. This transparency allows for a price formation process that reflects the collective supply and demand.

The nature of order-driven markets, where the execution of trades is fundamentally reliant on the interaction between public limit orders, ensures that the price discovery process is reflective of the market participants' strategies and sentiments. As such, option C accurately encapsulates the defining feature of order-driven markets.