The term "cross" has two definitions in finance. The first type of cross is when a broker receives a buy and sell order for the same stock at the same price, and subsequently makes a simultaneous trade between two separate customers at that price; variations of this are the market opening and closing crosses. The second type is a foreign exchange transaction in which neither currency is the U.S. dollar.


"Cross" is used several ways with regard to securities trades and also refers to a type of foreign exchange trade.

Cross by Broker

If a stock broker receives separate orders to buy and sell at the same price at the same time, he must offer the stock in the market at a higher price than the bid. If no higher bid is available, he can execute the two deals at the same time and at the same price.

Opening and Closing Crosses

The Nasdaq gathers and posts data on all buy and sell interest in the two minutes prior to its opening; this information is referred to as the opening cross. Traders can post orders to buy at the opening price or to buy if there is an order imbalance. This dissemination of pricing interest helps to limit disruptions in liquidity.

The closing cross on Nasdaq matches bids and offers in a given stock to create a final price of the day. Traders can place orders that can be either "market at close," which means buy or sell at the official closing price or "limit at close." In the latter case, if the price at the close is better than the specified limit, the deal will be executed at the market price. Nasdaq collects data for the closing cross between 3:50 p.m. and the closing time of 4:00 p.m. Cross orders are executed between 4:00 p.m. exactly and five seconds after 4:00 p.m.

Currency Cross

The dollar is the most actively traded currency in the multi-trillion dollar daily foreign exchange market. In the past, investors or hedgers who wanted to trade a pair such as the euro vs the yen, known as EURJPY, needed to do it through the dollar. This meant that buying EUR and selling JPY required the following steps: (1) buy EUR and sell USD and (2) buy the same amount of USD and sell JPY. Disadvantages of this approach include paying the bid/offer spread twice (once in each currency pair) and needing to deal for a USD amount rather than a EUR or JPY amount. However, the dollar pairs are more actively traded than the cross, so in times of volatility or reduced liquidity, traders may still execute via the components.

The most actively traded currency crosses are the euro vs the yen, British pound and Swiss franc. Cross trades can be done for spot, forward or options transactions.

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