The crossing of buy and sell orders refers to a type of securities transaction where a bank acts as an agent for both the buyer and the seller. In this scenario, the same institution facilitates the trade, allowing the two parties to execute their orders without going through the open market. This practice can help streamline transactions and reduce costs for clients.
This term is primarily used in the context of securities trading and banking regulations. It is relevant in legal practices involving financial transactions, investment, and compliance with federal regulations. Users may encounter this term when dealing with investment accounts or when reviewing the practices of brokerage firms. Legal templates from US Legal Forms can assist individuals in navigating these transactions effectively.
Here are a couple of examples of abatement:
Example 1: A client wants to sell shares of Company A while another client wants to buy the same number of shares of Company A. The bank facilitates this transaction by matching the two clients directly, thus crossing their orders.
Example 2: A brokerage firm receives buy and sell orders for the same stock from different clients. Instead of executing these orders on the stock exchange, the firm matches the two orders internally (hypothetical example).
| Term | Definition | Difference |
|---|---|---|
| Agency | A relationship where one party acts on behalf of another. | Crossing specifically involves buy and sell orders by the same agent. |
| Market Order | An order to buy or sell a security at the current market price. | Crossing involves matching orders without market execution. |
If you find yourself involved in a transaction that may involve crossing of buy and sell orders, consider the following steps:
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| Attribute | Details |
|---|---|
| Typical Fees | Varies by institution; often lower than market orders. |
| Jurisdiction | Federal regulations apply, along with state laws. |
| Possible Penalties | Violations can lead to fines or sanctions from regulatory bodies. |
To cross orders means to match buy and sell orders for the same security within the same institution.