What is a Crossed Market? Definition, Causes, and Example
A crossed market occurs when a bid price on one exchange exceeds the ask price on another exchange for the same security, creating an arbitrage opportunity where a trader can buy at the ask and immediately sell at the bid for a risk-free profit.
What is a crossed market?
A crossed market occurs when the highest bid price for a security exceeds the lowest ask price across all exchanges in the national market system. In a normal market, the best bid is below the best ask. In a crossed market, the bid is above the ask. For example, if AAPL has a bid of $210.01 on NYSE and an ask of $210.00 on Nasdaq, the market is crossed by one cent. A trader can buy at $210.00 and sell at $210.01, locking in a $0.01 per share profit before fees.
How a crossed market is identified
The consolidated tape aggregates quotes from all U.S. exchanges. The NBBO (National Best Bid and Offer) is calculated by taking the highest bid and the lowest ask across all venues. A crossed market exists when the NBBO bid is greater than or equal to the NBBO ask. The condition is detected in real time by market data systems and exchange surveillance. The SEC's Regulation NMS requires exchanges to route orders to the venue displaying the best price; a crossed market violates the orderly price discovery process.
Worked example: a crossed market in a large-cap stock
On August 14, 2026, at 10:23:04 a.m. ET, MSFT quotes appear as follows:
- NYSE: bid $428.12 × 1,000 shares, ask $428.15 × 1,000 shares
- Nasdaq: bid $428.13 × 2,000 shares, ask $428.14 × 1,500 shares
- Cboe BZX: bid $428.14 × 500 shares, ask $428.13 × 800 shares
The highest bid is $428.14 (BZX), and the lowest ask is $428.13 (BZX). The market is crossed by $0.01. A high-frequency trader buys 800 shares at $428.13 from BZX and sells them at $428.14 to the same exchange's bid, earning $8.00 gross. The exchange identifies the crossed condition and re-quotes within milliseconds.
When traders encounter crossed markets
Crossed markets occur during periods of extreme volatility, after news announcements, at the open and close, and during trading halts when quotes become stale. Retail traders rarely execute against crossed markets because smart order routers and exchange systems correct them within milliseconds. Institutional traders with access to direct market data feeds use crossed markets as an arbitrage signal. A persistent crossed market indicates a data feed error or a malfunctioning market maker.
Limitations and common misconceptions
A crossed market is not the same as a locked market. A locked market occurs when the bid equals the ask; a crossed market has the bid above the ask. Crossed markets do not persist; Regulation NMS and exchange rules require immediate resolution. Traders cannot rely on capturing crossed market profits consistently because latency and fee structures eliminate the edge. A crossed quote on a single exchange's display does not mean the national market is crossed; the condition applies only to the NBBO. Retail traders should not interpret a crossed market as a signal to trade; the arbitrage is reserved for participants with sub-millisecond execution.