Order Book Bottleneck

An Order Book Bottleneck occurs when the matching engine or the data feed infrastructure of an exchange cannot keep up with the volume of incoming orders. This results in a queue where orders are delayed before they can be matched, leading to stale prices and execution errors.

During high-volatility events, this bottleneck can become a significant source of systemic risk, as traders are unable to adjust their positions or manage their risk. In cryptocurrency exchanges, this is a common challenge during market rallies or crashes.

Addressing this requires robust system architecture, including parallel processing and high-performance hardware. It is a critical point of failure in electronic trading.