Market makers may not enter quotes that would lock or cross the market. A locked market is one where the bid and offer are equal in price. For example, if another market maker came into the above listed market for XYAD known as market maker 6, and entered a bid of 15.05 or an offer of 15.00, the bid or offer entered would lock the market. A crossed market is one where a bid is entered that is higher than the offer or, one where an offer is entered that is lower than the bid. If market maker 6 entered a bid of 15.10 or an offer of 14.95 the bid or offer would cross the market. A market maker who has an order that would cause them to enter a bid or offer that would lock or cross the market must make an effort to trade with all the market makers whose bid or offer they would lock or cross. The NASDAQ’s NASDAQ Market Center Execution System helps alleviate most locked or crossed markets.



Need Help Passing Your Series 57 Exam?





Nominal NASDAQ Quotes

Related Articles
  1. Personal Finance

    Got a Good Mortgage Rate? Lock It Up!

    Rising rates mean rising profits for lenders, providing incentive to increase rates whenever possible.
  2. Investing

    Negotiating the Bid

    A bid is an offer investors make to buy a security.
  3. Investing

    Role Of A Market Maker

    A market maker is a firm or an individual that stands ready to buy and sell a particular security throughout the trading session to maintain liquidity and a fair and orderly market in that security. ...
  4. Insights

    What's a Dealer Market?

    In a dealer market, market participants buy and sell through dealers who are designated as market makers.
  5. Investing

    Explaining Dutch Auction

    A Dutch auction is a public offering auction.
  6. Trading

    Introduction To Level II Quotes

    Find out what's happening in a given stock with this service showing Nasdaq market makers' best bid and ask prices.
  7. Investing

    Constellation Brands Investors Object to Candidate (STZ, COT)

    Constellation Brands (NYSE: STZ) held its annual meeting last month. While such events rarely host drama, it is fair to say that investors were not entirely satisfied with management's choices ...
  8. Trading

    What Happens in a Haircut?

    One meaning of haircut is the difference between prices at which a market maker can buy and sell a security.
Frequently Asked Questions
  1. What is the difference between yield and return?

    While both terms are often used to describe the performance of an investment, yield and return are not one and the same ...
  2. What are the Differences Among a Real Estate Agent, a broker and a Realtor?

    Learn how agents, realtors, and brokers are often considered the same, but in reality, these real estate positions have different ...
  3. What is the difference between amortization and depreciation?

    Because very few assets last forever, one of the main principles of accrual accounting requires that an asset's cost be proportionally ...
  4. Which is better, a fixed or variable rate loan?

    A variable interest rate loan is a loan in which the interest rate charged on the outstanding balance varies as market interest ...
Trading Center