Locked and Crossed Markets
A market is locked when the best bid equals the best ask, and crossed when the bid is higher than the ask. Both are usually brief, caused by quotes on different venues or delays in data.
A market is locked when the best bid equals the best ask, and crossed when the best bid is higher than the best ask. Both usually happen because quotes sit on different venues or market data arrives late, and US rules require firms to avoid displaying them. Other countries handle this differently.
- Category
- Market Structure
- Reading time
- 3 min
- Also called
- Locked market, Crossed market, Locked or crossed quotations
- Updated
Locked and crossed in plain words
A market is locked when a displayed bid equals the displayed offer for the same stock in the same quotation system.1
It is crossed when the bid is actually higher than the offer.1
For listed US stocks, SEC Rule 610 requires exchanges to make their members reasonably avoid quotes that lock or cross a protected quote.2
How locked and crossed markets arise and clear
Quotes on many venues
The same stock is quoted on several exchanges at once.
A new quote arrives
A trader posts a bid equal to, or above, another venue's ask.
Rules say avoid it
Avoid displaying a quote that would lock or cross a protected quote.2
Reconcile
Exchange rules must make sure locked or crossed quotes get resolved.2
Honour the first quote
The first price displayed should get filled at that price, not be locked or crossed by a quote on the other side.3
No repeat pattern
A pattern of locking or crossing quotes is banned outright.2
Worked examples
Example 1 — Locked
LockedHypothetical: Venue A bid 20.05, Venue B ask 20.05.
| Spread | 0.00 |
Bid and offer are equal — a locked market.1
Example 2 — Crossed
Crossed by 0.02Hypothetical: Venue A bid 20.07, Venue B ask 20.05.
| Spread | −0.02 |
The bid is above the offer, so the market is crossed; if both quotes were real, a fast trader could buy at 20.05 and sell at 20.07.1
Example 3 — Stale data
MissedA trader's screen shows a crossed quote that is already gone.
| Fill | Not at shown price |
Rules push venues to resolve these states, so they rarely last more than a moment.2
Normal vs locked vs crossed
| Aspect | Normal | Locked / Crossed |
|---|---|---|
| Bid vs ask | Bid below ask | Bid equal to / above ask |
| Spread | Positive | Zero / negative |
| Duration | Ongoing | Usually brief |
| Cause | Normal trading | Fragmentation or data delays |
Where this matters
Reading quotes
Spotting odd states in the Order Book.
Spreads
Understanding a zero or negative Bid-Ask Spread.
Order entry
Why a Limit Order may be rejected or repriced.
Fast trading
Data delays in Scalping.
Advantages and disadvantages
Advantages
- Rules keep quotes orderly.
- Protect the first displayed quote.
- Help keep displayed prices meaningful.
Disadvantages
- Can confuse traders reading screens.
- Stale data can show false opportunities.
- Orders may be repriced or rejected.
- Rules differ by country and market.
Going deeper
Read as far as you need. Each level builds on the one before it.
Definitions
Beginner
A locking quote is a bid equal to the offer already displayed.1
Firm duties
Intermediate
FINRA members need procedures to avoid displaying locking or crossing quotes, whether once or as a pattern.1
Why it matters
Advanced
The goal is fairness: whoever displayed a price first should be able to trade at it.3
Common mistakes
Treating a crossed quote as free money
It may be stale.
Ignoring venue
Quotes may be on different venues.
Assuming same rules everywhere
Rules differ by country.
Chasing with market orders
Use a limit price.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Locked: bid equals ask.
- Crossed: bid above ask.
- Usually caused by fragmentation or delays.
- US rules require firms to avoid them.
- Rules differ by country.
Frequently asked questions
How long do locked markets last?
Can I profit from a crossed market?
Are rules the same outside the US?
Further learning
- Bid-Ask Spread
Normal spreads.
- Order Book
Where quotes sit.
- Exchange
Venues that quote.
- Limit Order
Controlling price.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- FINRA. Rule 6437. Prohibition from Locking or Crossing Quotations in OTC Equity Securities (opens in a new tab) Checked .
- U.S. SEC (eCFR). 17 CFR 242.610 — Access to quotations (opens in a new tab) Checked .
- U.S. SEC. Regulation NMS Adopting Release 34-51808 (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.