Pre-open and pre-close
The time periods either side of an open market are referred to as "pre-open" and "pre-close".
During pre-open and pre-close, Bid and Ask prices can be entered into the market but trades will not occur until the market actually opens for trading.
Refer to the timetable below:
NZX pre-open: 9:00am ASX pre-open: 9:00am (NZT)
NZX open: 10:00am ASX open: 12:00pm (NZT)
NZX pre-close: 4:45pm ASX pre-close: 6:00pm (NZT)
NZX close: 5:00pm ASX close: 6:15pm (NZT)
Pre-open period
During the pre-open period, investors may examine the quantities and prices on either side of the market to predict the potential trading sentiment for the day ahead.
In a situation where the Bid price exceeds the Ask price during pre-open, the opening price is found by a rule-based algorithm used by the relevant stock exchange.
When the market opens, the algorithm takes into consideration the volume and prices on each side of the market and uses four sequentially-applied steps to determine the open price. If a result cannot be found when the first rule is applied, the second rule will also be applied and so on until a price is created.
If you wish to view more information about the algorithm, an explanation can be found on the Australian Stock Exchange website.
Pre-close period
The same logic applies during the pre-close period, where investors have a 15 minute window to enter an order into the market for it to be potentially "matched off" at the specified close time, according to the price and volume on the Bid and Ask sides of the market. If the order is not matched, based on Bid/Ask price and volume, the order remains in the market queue until the following trading day when it can then be altered, removed completely or left unchanged.
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