A crossing network is an

alternative trading system Alternative trading system (ATS) is a US and Canadian regulatory term for a non-exchange trading venue that matches buyers and sellers to find counterparties for transactions. Alternative trading systems are typically regulated as broker-dealers r ...

(ATS) that matches buy and sell orders electronically for execution without first routing the order to an exchange or other public displayed market such as an

electronic communication network An electronic communication network (ECN) is a type of computerized forum or network that facilitates the trading of financial products outside traditional stock exchanges. An ECN is generally an electronic system accessed by an electronic trad ...

(ECN). Such crossing networks are a type of

dark pool In finance, a dark pool (also black pool) is a private forum ( alternative trading system or ATS) for trading securities, derivatives, and other financial instruments.stock exchange A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for ...

. The advantage of the crossing network is the ability to execute a large block order without impacting the public quote and avoidance of

market impact In financial markets, market impact is the effect that a market participant has when it buys or sells an asset. It is the extent to which the buying or selling moves the price against the buyer or seller, i.e., upward when buying and downward whe ...

(i.e., the movements in a stock's price due to an investor's indication of interest). These networks are often owned and operated by

broker-dealer In financial services, a broker-dealer is a natural person, company or other organization that engages in the business of trading securities for its own account or on behalf of its customers. Broker-dealers are at the heart of the securities and ...

s to match buyers and sellers of large blocks of shares. Depending on the particular broker-dealer's system and the type of securities traded (e.g., exchange-listed or OTC securities), these crosses could occur at various times during the day, or after the close of trading, and could be priced at the last sale price or some other objective price, such as the midpoint between the bid and offer or the volume weighted average price (VWAP). Crossing networks tend to be used for highly liquid stocks and offer

money manager Investment management (sometimes referred to more generally as financial asset management) is the professional asset management of various securities, including shareholdings, bonds, and other assets, such as real estate, to meet specified inve ...

s the advantages of very low commissions, anonymity for the buying or selling, and avoidance of market impact. , examples of crossing networks included Liquidnet, Pipeline Trading Systems, ITG POSIT and Goldman Sachs' SIGMA X.

References

Financial markets {{Finance-stub