Nasdaq Amends Opening Auction for Retail Interaction

Nasdaq has changed its opening auction to give institutional investors the opportunity to interact with retail flow as there has been a rise in retail participation in US equity markets. According to a story in MarketsMedia news, Chuck Mack, head of US equities at Nasdaq, said, “Asset managers want more access to retail liquidity and we are helping to solve that problem in the opening auction. Increasing the diversity in the ecosystem participating in the opening auction improves the quality of the market so it is a win-win for everyone.” He explained that the composition of Nasdaq’s opening auction is different from the close as a significant portion of the open is from individual retail investors. The amendments include establishing an early order imbalance indicator (EOII) for the opening cross; extending the time period for accepting certain limit on open orders and changing cutoff times for on-open orders entered for the opening cross. “Prior to the change data was disseminated at 9.28 ET and institutions could only interact passively,” he added. “Now data is disseminated at 9.25 and managers have much more flexibility to interact with retail liquidity.”