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General Q/A
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Re: Cross Order.
girish kumar / HCL Technologies Ltd. <>
12 May 2009 2:15AM ET >Guys,
Just to simplfy the answer, Cross trade means, it is the trade which is sent by buyside to the sellside were the sellside will try to match the order internally with in their inventory and if the order matches then he will execute this internally and will not send to exchange.
In other case if the order parameter are not matching with the internal orders then the sellside firm will send the order to exchange.
Correct me if i am wrong.
Regards,
Girish
The example I gave, Ryan, was qualified by "[p]resuming the rules of the
> exchange permit such behavior" and "if [the broker] obtains agreement
> from [buyer and seller]," so, agreed, it may not be possible to effect a
> cross, the consent of parties is required, and the rules of an exchange
> (or other regulatory body) may apply.
>
> I submit this to be a rigorous definition of a cross trade: A cross is
> a trade effected by prior arrangement between buyer(s) and seller(s),
> on the basis of a dynamic reference price agreed upon by them in
> advance, through the agency of a third party acting in the capacity of
> broker or riskless principal and who impartially establishes the actual
> execution price.
>
> I further submit that a trade not meeting this exact definition is
> something other than a cross.
>
>
> > > 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.
girish kumar / HCL Technologies Ltd. 12 May 2009 2:15AM 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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