DEFINITION of Free-Crowd System

A free-crowd system is a system of commodity trading in which floor members of an exchange can make bid and offer orders simultaneously for personal or customer accounts. It is a common practice in the U.S. commodity markets.

BREAKING DOWN Free-Crowd System

The free crowd system gives floor traders the facility to enter orders as well as execute orders simultaneously. The bid and offer orders are executed simultaneously by a trader or broker matching them together from different accounts (either their own, their firm's, or on behalf of clients). In other words, they are both buying and selling, making purchase requests and putting up offers to sell – for the same items at the same time.

The free crowd system of trading is common to most major U.S. commodity exchanges.

Advantages of the Free-Crowd System

The advantage of the free crowd system is that it allows for transactions occurring at different locations at the same time with the trading ring for the designated commodity. Both immediate (spot) delivery or future delivery are possible through the free crowd trading system. More than a single trade at varied, different prices can be recorded at exactly the same time as well, leading to greater market efficiency.