A cross trade occurs when a buy order and a sell order for the same instrument are entered for different accounts under the same management, such as a broker or portfolio manager. To ensure that all market participants have a fair chance to trade at a price, exchanges impose minimum delays between such transactions. A cross trade is potentially illegal when both sides of the trade occur within the delay period.
TT Score identifies opposing buy and sell orders placed for the same instrument at the same price. When it finds a matching set of orders, TT Score determines the length of time between the orders.
TT Score assigns the following risk scores for cross trades:
The Cluster Scorecard shows activity that could indicate a cross trade. Use this scorecard to get a closer look at the activity that triggered the cross trading score. The following image shows results from inspecting a cross trading cluster.
When reviewing Audit Activity for cross trading, check if: