A public book is a list of orders to buy or sell securities, maintained by an order book officer. It contains limit orders and is used by market makers to facilitate order fulfillment. The book is closed, and details are only available to the staff member who maintains it.
A public book is a complete list of orders placed by the public to buy or sell securities. The name is a bit misleading, because the book itself is effectively closed. The “audience” is a reference to whether it contains public orders, not the public availability of the content. Some stock exchanges may use different terminology to refer to the public book. At the Chicago Board of Options Exchange (CBOE), for example, the public book is known as the official order book.
Usually, a public book contains limit orders. Limit orders are orders with strict parameters; placing a limit order allows someone to specify a maximum buy price and minimum sell price for a given security. These limits prevent people from incurring losses. However, they can also make it difficult to fulfill an order. If someone is asking too much or offering too little, an order can go unfilled until the market changes or the investor agrees to change the limits to facilitate a deal.
This list is maintained by a specialist or staff member known as an order book officer, not to be confused with the alternative name of the public book used at the CBOE. When members of the public place orders, the specialist takes note of the order size and specifications. This information is used to complete orders, and once completed, an order is removed from the public ledger.
Market makers who facilitate order fulfillment have access to the highest bids and lowest ask prices in the public book. This allows them to have information they can use to do business, connecting people who want to buy securities with people who want to sell them and vice versa. Details such as the size of orders and the number of orders in the public book, however, are closed and available only to the staff member who maintains the book.
At any given time, the public ledger provides information about currently outstanding orders. When the market moves quickly, orders can move through the book quickly as people find buyers and sellers quickly. In a slow market, orders can stay on the book while the specialist works to find a buyer. The market maker can play a key role in this process by matching and selling orders and facilitating deals to keep the market moving.
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