how the opening cross works
nasdaq s regular trading hours are between 9 30 a m and 4 00 p m eastern time monday through friday however nasdaq accepts trade requests for several hours after the market closes and several hours before it opens the process for the opening cross consolidates these requests and conducts an auction buyers and sellers place offers and counteroffers until prices match resulting in trades the goal is to maximize the number of executed trades by getting a given security to trade at a single price nasdaq makes the resulting data available electronically this gives market participants a greater window into the bid ask spread and helps identify order imbalances and situations where buyers and sellers cannot be matched nasdaq market on open orders can be placed changed or canceled from 7 30 a m until 9 28 a m eastern time on the days the exchange is open under the open cross system price matches use a 10 threshold or buffer to calculate the opening price of a stock for example if a buyer offers 100 per share for a given stock and a seller wants 110 the midpoint of the offer is 105 this midpoint is then multiplied by 10 the resulting 10 50 is then added to the buyer s offering price moving it to 110 50 and subtracted from the seller s price adjusting it to 99 50 this tells investors that the opening price for the shares is between 99 50 and 110 50 the opening cross calculates this for all stocks and provides updated information electronically every five seconds in addition the open cross system shows detailed information about the prices at which orders are expected to clear against each other the number of paired buy sell offers and the imbalance between offers as potential buyers and sellers see this data they make additional trades which the system also incorporates 