basic question re: cross trades prior to market op

  1. 139 Posts.

    Prior to market opening, where there is a big overlap between the prices for buyers and sellers,what is the protocol for matching the bids?

    Eg:
    Last Trade previous day, say $100
    Before open of market next day, the following punters are lining up at the start......

    Buyers at $110, $108, $107 and so on
    Sellers at: $93, $94, $95......

    Am I right in interpreting that the sellers' prices (in pre-open) are meaningful only in as much as dictating the order of trades, ie. whoever has the lowest bid gets first shot at the buyer at $110?

    Presumably, the first buyer is matched with the first seller, and the trade occurs at the BUYERS (not sellers) price??????

    If this is the case, is there a meaningful risk in bidding as low as required to maintain poll position as a seller prior to market opening???

    Thanks


 
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