A bid-ask spread is the gap between quoted buying and selling prices and is one market-liquidity measure; wider spreads generally imply greater trading cost or compensation for liquidity provision. Treat the spread as one dimension of liquidity, not as a complete measure of market liquidity, depth, or price impact.
ReviewedEvidence1 sourceSectionPhrases & Idioms
Quick answer
A bid-ask spread is the gap between quoted buying and selling prices and is one market-liquidity measure; wider spreads generally imply greater trading cost or compensation for liquidity provision.
Key details
Canonical Formbid-ask spread
Core MeaningA bid-ask spread is the gap between quoted buying and selling prices and is one market-liquidity measure; wider spreads generally imply greater trading cost or compensation for liquidity provision.
Further guidance
History Boundary
Current authoritative financial meaning is published without claiming an exact inventor, coinage date, or absolute first use.
Meaning
A bid-ask spread is the gap between quoted buying and selling prices and is one market-liquidity measure; wider spreads generally imply greater trading cost or compensation for liquidity provision.
Usage Boundary
Treat the spread as one dimension of liquidity, not as a complete measure of market liquidity, depth, or price impact.
Sources and evidence
Sources are shown with the role they play in this guide. Historical or style-sensitive claims are kept within the evidence boundary described above.
Average Effective Spread is a current Regulation NMS defined term. This guide preserves the specific U.S. securities-rule scope instead of substituting an ordinary-language meaning.
Average Percentage Effective Spread is a current Regulation NMS defined metric and should be read with the rule-defined average effective spread and average midpoint components.
Average Percentage Realized Spread is a current Regulation NMS defined metric; the page keeps its rule-defined denominator and does not substitute a generic percentage-spread meaning.
Average Quoted Spread is a current Regulation NMS defined term. This guide preserves share weighting and the special executable-time rule for midpoint-or-better limit-order executions.
Average Realized Spread is a current Regulation NMS defined term. This guide preserves its share weighting, buy/sell direction, post-execution timing, and final-trading-hours midpoint provision.
Under current U.S. Regulation NMS definitions, best bid and best offer mean the highest-priced bid and the lowest-priced offer. Treat this as a U.S. securities-regulation definition. Do not collapse it into the NBBO concept or generalize it to every use of best price outside this rule context.
Under current U.S. Regulation NMS, a “bid or offer” is the bid price or offer price communicated by an exchange or association member to a broker, dealer, or customer at which it is willing to buy or sell one or more round lots of an NMS security as principal or agent; indications of interest are excluded. Keep this definition tied to 17 CFR § 242.600; everyday uses of bid and offer and other market-rule definitions can differ.
A “credit spread” compares the yield on credit-risky debt with a benchmark yield of comparable maturity. Federal Reserve discussion notes that corporate-bond spreads compensate for default and liquidity risks rather than representing a pure default probability.
