So I have recently understood the meaning of a bid-ask spread and how market makers are involved in this process.
However if I am not one of the lucky few 'members' of for instance the Amsterdam Euronext that can place orders directly on the actual stock exchance, I would have to go through some bank or broker that is willing to place my limit order on the exchange.
I am interested in the 'physical' process of placing a (limit) order through an intermediate like a broker.
Consider the following situation where stock xyz has a bid of €10.10 and an ask of €10.20, if I ask my broker to put forth a limit buy order at €10.15 which of the following two scenarios occurs?
a) My limit order just sits there hanging because its limit €10.15 is below the current ask of €10.20 and I have to wait for market makers to feel compelled to make a move towards €10.15, i.e. I am just waiting until the ask moves down to or lower then €10.15. I am not even sure what hanging means in this situation. Is my order hanging with my broker who is somehow checking the market maker spreads and the exchange 'just' offers the infrastructure to do this. This is what is called Request for Quote? If this is the case I am always a slave of the spread and I just have to pray that the spread is tight, right?
b) Is my limit order physically placed (albeit on name of my broker) on the exchange admits all other outstanding orders of direct market participants like market makers and authorized trading firms. Which means that I can actually place my limit order in the middle of a spread which hopefully gives me a better deal then a straight market order. In this case if trading volumes are high, I can beat the spread. Because I can pose a better deal then the market makers for other market participants right? Is this what they call Central Limit Order Book?
Do I understand RfQ and CLOB correctly and if so, which of these two models is applicable to the Amsterdam Stock Exchange and other large exchanges like NASDAQ.