Mechanism of sudden bid-ask spread changes

External question — Personal Finance Stack Exchange Author: koyamashinji Original post: https://money.stackexchange.com/questions/135396 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Bid and ask chart are sometimes very different in its shape, like this bid chart and ask chart (USD/JPY, @OANDA platform). At around 7:00AM on its ask chart , ask price ranges between 103.580 to 103.650. At around the same time on its bid chart , bid price goes up as high as 103.740. I understand that this is because of (1) a sudden change of bid-ask spread (Usually ask > bid in a stable market, but suddenly at 7.00AM., bid is way higher than ask.), and (2) the sudden change occurs under high volatility or low liquidity . But I don't quite understand how (2) leads to (1), and why can't brokers keep their spread same under (2)? Could someone shed light on the mechanism?

External answer — Personal Finance Stack Exchange Author: TomTom Original post: https://money.stackexchange.com/a/135401 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Because brokers do not make the spread. The book is the result of the pending passive orders of actors, not the broker. If every actor decides to change his order book entries, then the resulting order book changes. You literally ask why the weather forecast people can not change the weather - they od not make the weather, same way brokers do not decide the order book. Also, the entries by market participants are what they consider reasonable - and in constant competition trying to make the best offer. So, in certain times, they all decide to lower their risk and widen the spread. They are not there to make YOU money - why the heck should they not widen the spread or change their entries when the risk profile changes?