What is the cross market?

The

cross market is a market situation in which the bid price is associated with a particular security higher than the price of ASK. This type of market event is generally considered to be contrary to common market conditions in which the offer or request would be higher than the bid price. This type of situation is most likely to occur when the market is generally very volatile and the volume of business activity is significantly higher than usual.

While the cross market can evolve due to unexpected events that occur during the trading day, such as the unusually high influx of electronic orders, there is an increased possibility that this situation is developing when an extremely large number of orders are placed at the beginning of the day. If this happens, the opening of the market may be obvious imbalance in the range of ASK menu. If the economy does not develop unusual circumstances this is a feeding of this phenomenon, there is a great chance that the gap between the offer and the request for the price will take place during the market opening hourscontinue to shrink, which eventually restores the normal market situation.

It is also possible to artificially create a crossed situation on the market by deliberately publishing bid prices that are in line with the questioning or offered prices. This type of activity is generally considered unethical in most markets and is actually illegal in others. The reason why this strategy does not look up with kindness is that it allows a limited number of market creators to use the situation and may continue to make it last for a longer period of time while making purchases and sales that would not be possible in the normal market situation.

For the large extent, the crossing market is unlikely to last for a long time if there are significant shocks in the wider economy that have a direct impact on the specific securities that are traded on the market. These unexpected events may include a sudden resignation of key players within a large company traded on the marketU, the occurrence of a natural disaster or even some events, such as hostile takeover of societies or overthrow of the government. In most situations, the crossing market will start to stabilize in a short period of time, allowing the market to regain balance and restore the relationship between offer and ask prices to a state that is considered normal than unusual.