Crossed Market
A crossed market occurs when the bid price (the highest price a buyer is willing to pay) of a security is higher than the ask price (the lowest price a seller is willing to accept) on a stock exchange or trading platform. This situation is unusual and typically results from delays in updating prices or discrepancies between different exchanges. Crossed markets are generally corrected quickly as arbitrage opportunities emerge, and the prices are adjusted to reflect the actual supply and demand.
Example
A stock has a bid price of $50 and an ask price of $49 on two different trading platforms, creating a crossed market where the buyer is willing to pay more than the seller’s asking price.
Key points
• A crossed market happens when the bid price exceeds the ask price for a security.
• This rare occurrence usually results from delayed price updates or discrepancies between exchanges.
• Crossed markets are typically resolved quickly through price adjustments or arbitrage.
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