Do agency cross transactions need to be conducted on an exchange?

Agency cross transactions do not need to be conducted on an exchange. An agency cross transaction occurs when a broker acts as an agent for both the buyer and the seller in a trade. This type of transaction can be executed over-the-counter (OTC) rather than being restricted to trading on an exchange.

The primary consideration in agency cross transactions is the broker's obligation to disclose information to both parties involved in the trade, ensuring transparency and fairness. Additionally, regulations governing these transactions focus primarily on the broker's duty to act in the best interest of both clients, rather than mandating a specific venue for the transaction.

Therefore, it is permissible for agency cross transactions to take place outside of formal exchange environments, making the option that states they do not need to be conducted on an exchange accurate.