Trading Over The Counter And NASDAQ Securities - Locked And Crossed Markets
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.