How does a cross trade pose a problem to the retail investor

External question — Quantitative Finance Stack Exchange Author: Victor123 Original post: https://quant.stackexchange.com/questions/9957 License: CC BY-SA 3.0 — https://creativecommons.org/licenses/by-sa/3.0/ Adaptation: HTML converted to plain text; contact email addresses removed. How does a cross trade pose a disadvantage to the retail client. In this explanation It says: This opens the door for one or both parties to not receive the best price for either portion of the dual transaction If broker A is buying and broker B is selling and the trade is not recorded in the exchange, then how does it affect the retail investor? If the trade does not record in the exchange, will the trade still affect the price?

External answer — Quantitative Finance Stack Exchange Author: lehalle Original post: https://quant.stackexchange.com/a/9959 License: CC BY-SA 3.0 — https://creativecommons.org/licenses/by-sa/3.0/ Adaptation: HTML converted to plain text; contact email addresses removed. I guess this remark refers mainly to "penny stocks". In the US (it is not true in Europe where crossing is far more regulated) it may be possible to choose to cross at any point inside the bid-ask spread. It means that if it is closer to the bid than to the ask, it will advantage the buyer. In Sub Penny Trading in US Equity Markets (by Romain Delassus, Stéphane Tyc), this point is discussed in detail.