A public book is a complete listing of orders placed by the public to buy or sell securities. The name is a bit misleading, because the book itself is actually closed. The "public" is a reference to the fact that it contains orders from the public, not to the public availability of the contents. Some securities 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 order book official.
Commonly, a public book contains limit orders. Limit orders are orders with strict parameters; placing a limit order allows someone to specify a maximum buying price and minimum selling price for a given security. These limits prevent people from taking losses. They can also make it difficult to fill an order, however. If someone is asking too much or offering too little, an order may remain unfilled until the market changes or the investor agrees to change the limits to facilitate a deal.
This listing is maintained by a specialist or a staff member known as the order book official — not to be confused with the alternate name for the public book used at the CBOE. When members of the public submit orders, the specialist notes the size of the order and the specifications. This information is used to fill the orders, and once filled, an order is taken off the public book.
Market makers who facilitate the filling of orders have access to the highest bids and lowest ask prices in the public book. This allows them to have information which they can use to make deals, connecting people who want to buy securities with people who want to sell them and vice versa. Details such as the size of the 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 book provides information about currently unfilled orders. When the market is moving briskly, orders may move rapidly through the book as people find buyers and sellers quickly. In a slow market, orders can sit on the book while the specialist works to find a taker. The market maker can play a key role in this process by matching up by and sell orders and facilitating deals to keep the market moving.
