Design Stock Exchange
Last Updated: December 30, 2025
What is a Stock Exchange?
A stock exchange is a centralized marketplace where buyers and sellers trade financial instruments like stocks, bonds, and derivatives. It acts as an intermediary that matches buy orders with sell orders to facilitate trades.
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The core function of a stock exchange is price discovery, determining the fair market price of a security based on supply and demand. When a buyer's price meets or exceeds a seller's price, a trade is executed.
Popular Examples: NYSE (New York Stock Exchange), NASDAQ, SENSEX, Binance (for crypto)
What makes stock exchange design fascinating from a systems perspective is the extreme demands it places on every component.
We are not talking about "fast" in the way most web applications mean it. Professional traders measure latency in microseconds, and a delay of even a few milliseconds can mean the difference between a profitable trade and a missed opportunity.
The system must process hundreds of thousands of orders per second while maintaining perfect fairness, meaning orders must be processed in exactly the order they were received, with no exceptions.
This problem tests your ability to design systems with ultra-low latency, high throughput, strong consistency, and fairness guarantees.
In this chapter, we will explore the high-level design of a stock exchange system.
Let's start by clarifying the requirements: