Nasdaq Market Center Systems Description

 

 

The Nasdaq Market Center uses the following process to “wake up” market 

participant quotes and X and IOX Orders.  All quotes and limit price X Orders wake up at 

9:25:00.  Any order or quote whose limit price does not lock or cross the book is added to 

the book in strict time priority.  Orders or quotes whose limit price would lock or cross 

the book are placed in an “In Queue” state, also in time priority.  Once the wake-up 

process has been completed, within seconds after 9:25, the Nasdaq Market Center begins 

executing quotes and X Orders that were held In Queue in strict time priority regardless 

of quote or order type.  In Queue quotes and orders that are not executable are added to 

the book.  All quotes and X or IOX Orders entered while the system is waking up and 

sorting to clear locks and crosses are suspended.  Once this process is complete, the 

system resumes processing the input queue of quotes, X and IOX Orders as needed to 

maintain an unlocked market. 

 

All Nasdaq-listed stocks are eligible to participate in the Nasdaq Opening Cross.  

There are three components of the Nasdaq Opening Cross:  (1) On Open and Imbalance 

Only order types; (2) the dissemination of an order imbalance indicator via a Nasdaq 

proprietary data feed; and (3) opening cross processing in the Nasdaq Market Center at 

9:30 that will execute the maximum number of shares at a single, representative price that 

will be the Nasdaq Official Opening Price.  Each component is described in detail below. 

 

The new opening cross begins with market participants entering On Open and 

Opening Imbalance Only order types in the Nasdaq Market Center.  On Open Orders are 

not displayed in the quotation montage or disseminated via any Nasdaq data feeds.  On 

Open orders execute only at the price determined by the opening Nasdaq cross.   

 

 

On Open orders can be un-priced and entered as Market on Open (“MOO”) 

orders, or priced and entered as Limit on Open (“LOO”) orders.  MOO orders can be 

entered, cancelled, and corrected anytime between 7:30 a.m., when the system opens, 

until 9:28:00 a.m. when Nasdaq begins disseminating the opening order imbalance 

indicator.  LOO orders can be entered from 7:30:00 until 9:29:59.  LOO orders are 

subject to price improvement if the buy (sell) order is greater than (less than) the opening 

price.  A LOO order at the opening price will not be filled if there are insufficient shares 

available on the opposite side of the market to fill the LOO order.   

 

 

To reduce price volatility in the Opening Cross, LOO orders submitted after 

9:28:00 a.m. are treated differently than those submitted before 9:28:00.  LOO orders 

entered prior to 9:28:00 may have any limit price and may be cancelled anytime prior to 

9:28:00 a.m.  Late LOO Orders may only be submitted within a specified price range 

based on the last calculated Nasdaq Order Imbalance Indicator.  Late LOO Orders 

submitted outside the prescribed price range will be rejected.  If there is a sell imbalance, 

Late LOO Orders to sell must be priced no lower than the “near clearing price” 

(described below) or they will be rejected.  Late LOO Orders to buy must be priced no 

higher than the “inside match price” (also described below) or they will be rejected.  If 

there is a buy imbalance, Late LOO Orders to buy must be priced no higher than the near 

clearing price and Late LOO Orders to sell must be priced no lower than the inside match 

 

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price or they will be rejected.  Finally, if there is no imbalance, Late LOO Orders to buy 

must be priced no higher than the inside match price and Late LOO Orders to sell must 

be priced no lower than the inside match price or they will be rejected.  Late LOO orders 

cannot be cancelled at any time for any reason, although their price can be improved or 

their share size increased. 

 

 

Opening Imbalance Only (“OIO”) orders must be priced as limit orders and are 

not displayed or disseminated.  These orders provide supplemental liquidity and execute 

only on the opening cross against any imbalance.  OIO orders that are priced more 

aggressively than the Nasdaq Market Center inside ask (bid) before the open will be re-

priced to the ask (bid) both for the purposes of the imbalance dissemination message and 

for executing on the opening cross.  In this regard, they allow market participants to add 

liquidity to the market and help to ensure the execution of MOO and marketable LOO 

orders.  OIO orders can be entered beginning at 7:30 a.m. until immediately before the 

market open.  Imbalance orders can be improved after the cancellation threshold and if 

improved will receive a new timestamp. 

 

In addition to MOO, LOO, and OIO orders, the Opening Cross includes:  (1) 

market participant quotations, both displayed and reserve size; (2) orders that are entered 

with a time-in-force of Day, GTC or IOC prior to 9:28:00 (collectively “Early Regular 

Hours Orders”), which fully participate in the Opening Cross; (3) Day, GTC, and IOC 

orders that are entered after 9:28:00 (collectively “Late Regular Hours Orders”), which 

participate in the Opening Cross only to the extent that there is available liquidity on the 

other side at the Crossing Price; and (4) X and IOX orders.  Additionally, after 9:28, all 

requests to cancel and cancel/replace Early Regular Hours Orders or Late Regular Hour 

Orders are suspended.  If those orders are not executed during the Opening Cross, the 

requests for cancellation will be processed. 

 

At 9:25 a.m. Nasdaq begins disseminating an opening order imbalance indicator 

on Nasdaq proprietary data feeds.  Although the Opening Cross occurs at 9:30, the order 

imbalance indicator is disseminated to give participants insight into the state of the book 

and the opening cross if it were to take place at that time.  The opening imbalance 

information includes several pieces of information regarding the cross:  (1) the number of 

shares represented by MOO, LOO, OIO and Early Regular Hours orders that are paired at 

or within the current the Nasdaq Market Center inside; (2) the MOO, LOO, and Early 

Regular Hours orders imbalance at the current Nasdaq best bid or offer, depending on the 

direction of the imbalance; (3) the buy/sell direction of that imbalance at the current 

inside price; (4) an indicative clearing price range at which the Nasdaq Opening Cross 

would occur if the Nasdaq Opening Cross were to occur at that time; and (5) the percent 

by which that indicative price varies from the Nasdaq inside match price.  The indicative 

clearing price range is bounded on the far side by the price at which all MOO, LOO, 

OIO, and Early Regular Hours orders would cross with only each other.  It is bounded on 

the near side by the price at which the MOO, LOO, OIO Early Regular Hours orders, 

Extended Hours Orders and Quotes would clear.  Where no clearing price exists, Nasdaq 

disseminates an indicator for “market buy” or “market sell.” 

 

 

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