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 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 that widely disseminates orders e ...

(ECN), which displays a public quote. These broker-dealers employ computerized systems to match buyers and sellers of large blocks of shares without using the stock exchange. 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). The advantage of the crossing network is the ability to execute a large block order without impacting the public quote. Crossing networks tend to be used for highly liquid stocks and offer money managers the advantages of very low commissions (e.g., 1 to 2 cents per share or lower), anonymity for the buying or selling account, 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 when ...

(i.e., movements in a stock's price due to an investor's indication of interest). Examples of crossing networks are Liquidnet, Pipeline, ITG's Posit, ETF One, and Goldman Sachs' SIGMA X.http://www.gs.com/electronictrading

See also