A period of time that precedes trading on an initial public offering (IPO) in which NASDAQ accepts buy and sell orders for the product offering, prior to the new issue auction. The auction takes place at the scheduled time plus a short random period to prevent gaming. Investors can cancel their orders during the quote-only period. NASDAQ will systematically extend the quote-only period for the IPO for five minutes if there appears to be a market order imbalance at the time of the IPO pricing or if there is excessive volatility leading up to the IPO cross. Volatility is usually defined as a movement of 10% or 50 cents (whichever is greater) based on the price immediately prior to the cross and the dissemination 15 seconds prior to the cross. Working with the lead underwriter, NASDAQ also has the authority to manually extend the quote-only period for five minutes when necessary.
Investment Banking
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