Imported from previous forum
Could any one explain the meaning of these two order type
- Cross
- Cross Short
[ original email was from Ryan Pierce - rpierce@taltrade.com ]
> Could any one explain the meaning of these two order type
>
>
> 1) Cross
> 2) Cross Short
Cross and Cross Short are not terribly well defined at this time.
Generally, a cross happens when two parties for a trade are already located (i.e. a broker and a client, or two different mutual funds within the same buy-side), but to guarantee a fair trade the blessing of an exchange is needed. This may take the form of the cross being accepted or rejected, or, in some marketplaces, other exchange participants can trade against one side or the other of the proposed cross. (i.e. price improving it, or if they have priority over either of the parties.)
A cross short happens when the selling side of the cross wants to establish a short position, hence some tick direction rules may need to apply.
The responses to orders of type Cross or Cross Short aren’t well-defined in FIX. There’s a rough proposal I posted to the Futures and Options Working Group discussion board outlining a possible representation for crosses.