A crossed trade refers to a transaction in which a broker facilitates the purchase and sale of securities between two clients who have opposing interests. This type of trade is typically executed at the same price and is subject to certain regulatory requirements to ensure fairness and transparency.
A crossed trade refers to a transaction where a broker matches buy and sell orders for the same security at the same price, without exposing the orders to the open market.
Yes, crossed trading is legal in many jurisdictions, including the United States. However, it is subject to certain regulations and restrictions to ensure fairness and transparency.
Crossed trading can provide benefits such as reduced transaction costs, faster execution, and increased liquidity. It can also be useful in situations where there is a lack of market depth or when executing large block trades.
Crossed trading can reduce market transparency as the transactions are not exposed to the open market. However, regulators often require reporting of crossed trades to ensure transparency and prevent market manipulation.
In some cases, retail investors may be able to participate in crossed trading if they have access to platforms or brokers that facilitate such transactions. However, it is more commonly used by institutional investors and market professionals.
Regulation of crossed trades varies by jurisdiction. In the United States, for example, the Securities and Exchange Commission (SEC) regulates crossed trades under specific rules, such as Rule 611 of Regulation NMS.
Crossed trading itself is not considered market manipulation if conducted within the boundaries of applicable regulations. However, if it is used to manipulate prices or deceive market participants, it may be deemed illegal and subject to penalties.
Investors can ensure fair treatment in crossed trading by working with reputable brokers or platforms that adhere to regulatory requirements. They should also stay informed about the rules and regulations governing crossed trades in their jurisdiction and report any suspicious activities to the relevant authorities.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 12th April 2024.
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