An acronym for central limit order book; a limit order book that connected as a central network. It is a transparent trading method that is used by most exchanges, worldwide, to match trading orders (bids and offers) on a price/ time priority basis. Orders to buy or sell “rest” in a queue and filled on a priority basis (price and time of entry). Orders, in the central limit order book, are initially prioritized (ranked per priority) according to bid or offer prices. When orders have the same price, ranking is determined on the basis of entry time.

Orders are first ranked according to their price. Then orders of the same price are then ranked depending on when they were entered. The highest bid order and the lowest offer order form the best available market price. Traders can recurrently cross the bid-ask spread and take advantage of best prices available and low-cost filling of orders.

The use of a this order book is common for highly standardized securities/ contracts and small size orders.