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General Q/A
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Re: Cross Order.
Ryan Pierce (FPL Technical Director) / FIX Protocol Ltd.
6 May 2009 12:42PM ET > If he obtains agreement from both, he will effect the trade.
That might not necessarily be possible. In addition to consent from the parties, as Hanno said, the Cross order may be submitted to an exchange, whose rules may apply and may affect how, or if, the cross is executed.
It is possible that a cross could be declined by the exchange.
It is also possible that the exchange could step into the middle of the proposed cross and trade some or all of one side, and leave the remainder of the other leg on the book, or cancel it.
A cross may also involve an agreed trade between the broker's own proprietary inventory and the client.
E.g. the book may appear as follows:
Bid Offer
1000 @ $10.25 1000 @ $10.26
1000 @ $10.24 2000 @ $10.27
1000 @ $10.23 1000 $ $10.28
A client may want to buy a block of 100,000 shares, and may agree to do it with the broker at $10.27, which is outside the NBBO, but is still reasonable, especially considering the volume involved and its market impact. So the broker may send a cross for 100,000 shares at $10.27 to the exchange. The exchange may respond by matching 1000 shares @ $10.26 and 2000 shares @ $10.27 from the book with the client leg to buy, and then matching the remaining 97,000 shares of the client leg to buy with 97,000 of the broker's leg to sell at $10.27, and then canceling out the rest of the broker's leg to sell.
Cross Order. Sridhar Satyanarayan / Deutsche Bank, India 6 May 2009 8:52AM ET Re: Cross Order. John Harris / BondMart Technologies, Inc. 6 May 2009 10:42AM ET Re: Cross Order.
Ryan Pierce (FPL Technical Director) / FIX Protocol Ltd. 6 May 2009 12:42PM ET Re: Cross Order. Scott Atwell / American Century Investments 12 May 2009 8:49AM ET Re: Cross Order. Jay De Young / Chicago Mercantile Exchange 12 May 2009 9:33AM ET Re: Cross Order. John Harris / BondMart Technologies, Inc. 12 May 2009 9:34AM ET
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