How long is the random time internal at the open?

How long is the random time internal at the open?

• A. 2 minutes
• B. 1 minute
• C. 3 minutes
• D. 5 minutes

Answer: (A)

The opening process uses a short, randomized window during which orders can be submitted and the opening price is determined. This random time at the open lasts two minutes. Two minutes strikes a balance: it’s long enough for a variety of orders to flow in and participate in the price discovery, but short enough to establish the opening price promptly. If the window were shorter (like one minute) it could miss some liquidity; if longer (three or five minutes) it would delay the initial market price.

The opening process uses a short, randomized window during which orders can be submitted and the opening price is determined. This random time at the open lasts two minutes. Two minutes strikes a balance: it’s long enough for a variety of orders to flow in and participate in the price discovery, but short enough to establish the opening price promptly. If the window were shorter (like one minute) it could miss some liquidity; if longer (three or five minutes) it would delay the initial market price.