The term "Choice Market" is synonymous with a Locked Market. It's the rare occurrence when a market has equal bid and ask prices with zero spread.
The SEC banned a choice market scenario for stocks in 2007 with the Regulation National Market System, as it is considered to contravene an orderly market, and would put the public at risk. A choice market scenario will sometimes occur mathematically in the Forex markets, where bps, or basis points, are the unit of quotation, and can equate to fractions of a penny’s differential between a listed bid and ask, with extra decimal places needed to see the differential.
We see choice markets all the time, where both parties immediately agree to the price of exchange on an item. It’s called a donation, and the price is technically zero, as far as bookkeeping is concerned.
Related or Semi-related Video
Finance: What is an Auction Market?13 Views
Finance a la shmoop... what is an auction market.. next up on the block [Man speaking on stage]
we've got stock in the company comb Depot....
okay yeah so the New York
Stock Exchange is an auction market and you have no idea how much caffeine I had [Man holding a monster energy drink]
to have to get that right which means that the prices on the new york stock
exchange happen during a bidding process we're matching offers get you know [People frantically rushing to bid for stocks]
matched... buyers and sellers buy and sell at the
same time so in essence two transactions are happening at once the opposite of
this sort of market is the over the counter or OTC market where dealers are
the ones holding all the cards and they ultimately determine the price by [Dealer with the cards]
creating a spread from where they're willing to sell your shares and what
price they'll pay to buy your shares but in an OTC market well you don't get to [Dogs running side by side]
feel like you're watching the last leg of a greyhound race so you don't get all
my caffeinated auction talk there which is kind of cool we like that, right..right?
Up Next
What is a Dutch Auction? A Dutch Auction is either one where closed quantity and price bids are entered and the price is set at the highest price t...