Crossed Market
Why is a crossed market, whereby a bid quote is higher than an ask quote, considered to be bad for market efficiency?
Why is a crossed market, whereby a bid quote is higher than an ask quote, considered to be bad for market efficiency?
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Most exchanges have systems to prevent matching or crossed markets.
If there is a market where a commodity is $101 bid and $100 offer, that's a crossed market. This basically means that the market is not functioning as it should. It's more of a sign of market inefficiency than anything else.
I am not aware of this happening on major exchanges, maybe happens in smaller or non-NMS, or otc exchanges.I suppose this could also happen in a circumstance where the exchange is preventing a self-match.
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