In What Ways Do the Unique Contract Terms of Derivatives Pose a Challenge for CLOB Systems?

Unique contract terms in derivatives, such as non-standard expiration dates, custom underlying assets, or complex payout structures, make them non-fungible. A CLOB relies on fungibility, where all contracts of a certain type are identical, allowing for anonymous matching based solely on price.

When every contract is different, it's impossible to create a centralized order book with sufficient depth. Matching algorithms would need to account for countless variables beyond price, which is computationally impractical and defeats the model's simplicity.