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Why a Crypto Exchange’s Matching Engine is Essential for Trading Operations

Order matching engine architecture plays an important role in the operation of crypto exchanges. They enable the exchange to match buy and sell orders from users in real time. In this blog post, we will investigate how and why a typical crypto exchange matching engine works as well as the benefits it can provide.

What is a Matching Engine, and How Does It Work?

As well as being known as a matching algorithm, a matching engine is a tool that facilitates the matching of orders between buyers and sellers on a trading platform, such as a crypto exchange. This component is a part of exchange software development at the heart of any crypto, Forex or any other type of exchanges, being responsible for the execution of trades and maintaining order records.

Matching engines take orders from buyers and sellers and match them up with one another, usually keeping track of orders using a priority queue. An engine can easily match orders based on the price and time-stamp of orders by using a priority queue. In addition to having an order book, the engine will typically keep a record of all orders that have been placed but have not yet been processed. New orders are matched against any existing orders in the system when they are received by the trade engine. An order will be executed by the engine as soon as a match is found and notification will be sent to both parties. In case a new order comes in that matches one of the open orders, the engine will also match it with the open orders that have not yet been matched.

The purpose of matching engines is to process large volumes of trades in a timely and efficient manner by using high-performance computer systems. In order to keep up with the rapid rate of trading activity in the market, matching engines are capable of processing hundreds or even thousands of trades a second. On cryptocurrency exchanges, there is often a great deal of trading activity, so keeping up with this is essential.

The Benefits

  • One of the primary benefits of having a matching engine is the ability to execute trades rapidly. It is possible for the engine to prevent such instances as buy and sell orders canceling each other out, or trades not being executed at the best possible price by keeping track of all outstanding orders. As a result, market participants are able to save time and money, and ensure a smooth functioning market.
  • Additionally, a matching engine can improve market transparency by providing more clarity. Market participants will be able to get a better understanding of what is happening in the market as well as how prices are likely to change by keeping track of all outstanding orders. Having access to this information can help to reduce uncertainty and assist market participants in making deliberate decisions about their trades.
  • As a final point, the use of an exchange matching engine can contribute to improving the liquidity of a market. Through the engine, it is possible for buyers and sellers to locate each other more easily and make purchases more quickly, thereby ensuring that there is always someone willing to buy or sell at any given price. Market participants can take advantage of this to make it easier to enter and exit trades, which can maintain a smooth flow of currency on the market.


All of the above highlights the fact that matching engines being a part of Forex or crypto exchange platforms software are vital to many financial markets and can benefit market participants in a number of ways. Market participants can benefit from the engine’s ability to ensure that trades are executed quickly, efficiently, provide transparency in the market, and improve liquidity, which will enable the market to function more efficiently and effectively, saving them time and money while reducing uncertainty.

IEMLabs is an ISO 27001:2013 and ISO 9001:2015 certified company, we are also a proud member of EC Council, NASSCOM, Data Security Council of India (DSCI), Indian Chamber of Commerce (ICC), U.S. Chamber of Commerce, and Confederation of Indian Industry (CII). The company was established in 2016 with a vision in mind to provide Cyber Security to the digital world and make them Hack Proof. The question is why are we suddenly talking about Cyber Security and all this stuff? With the development of technology, more and more companies are shifting their business to Digital World which is resulting in the increase in Cyber Crimes.


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