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Zerodha HLD: The Matching Engine at the Heart of a Stock Exchange

A stock exchange system design (Zerodha): a limit order book with price-time priority, the matching algorithm, an in-memory engine kept durable by a journal, and correctness over availability.

By fiveyearsdevJune 14, 20269 min read

"Design Zerodha" — or any stock exchange — and the watchlists, charts, and portfolios are a sideshow. The heart is one component that must be fast, exactly correct, and perfectly fair all at once: the matching engine. It takes a stream of buy and sell orders and pairs them off by strict rules, in microseconds, with money on every decision. Get the matching wrong and you've mis-filled a trade — a real financial loss and a regulatory incident. So this design is the opposite of the Amazon cart: where the cart chose availability over consistency, an exchange chooses correctness and determinism ove…

What’s inside

Let's start nowhere near a computer

Where this exact shape shows up

Step 1 — Functional requirements (sentences first)

Step 2 — Non-functional requirements

Step 3 — The order book

Step 4 — The matching algorithm

Step 5 — Durability: journal first, match second

Step 6 — Verbs become APIs (the API design)

Step 7 — Trade-offs (each one keeping an NFR)

The complete implementation

Step 8 — Only now, the boxes

Step 9 — Scaling the design, one bottleneck at a time

Step 10 — When a piece fails: designing for failure

The interview corner

Where to go from here

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