Listed auction accommodation and open-book execution

How the listed book is matched

A designated dealer is the listed-market participant charged with matching public orders and keeping a fair and orderly market in one stock. Accommodation means filling the scarce side of an auction or continuous match from that dealer's inventory without joining the already-heavy side.

A single-price auction is an opening or closing match in which eligible buy and sell interest clears at one price.

Accommodation at the single-price open

In a single-price listed opening, the designated dealer may supply the scarce side from inventory to complete the match but may not participate on the already-imbalanced side.

When a listed name is under one-sided opening pressure, brief opposite-direction ticks can still print. The designated dealer can take part in larger block prints on both sides rather than only adding inventory in the direction of the move.

A trader who estimates a fair opening value can attempt to stand on the same side the designated dealer is required to accommodate in that single-price match.

Participation after the open

After the open, the designated dealer continues to accommodate incoming orders to keep a fair and orderly market and may only join existing interest rather than initiate an uptick or downtick.

Participation means joining interest that is already being traded, rather than starting a new uptick or downtick.

Tape reading with the open book

Execution-oriented tape reading on a listed market includes the open electronic book and the live bid, offer, and displayed size, not only the sequence of prints. The open book is the displayed electronic rest of limit interest that shows where size sits away from the inside quote. Tape reading uses those prints together with the open book and the live bid, offer, and size to infer who is demanding liquidity.

A listed market uses a single marketplace and a national best bid or offer quotation convention, which differs from a competing market-maker venue. The national best bid or offer is the best displayed bid and offer under that single-marketplace quotation convention.

Published imbalances into the close

Published buy or sell imbalances released about 20 minutes before the listed close identify names with excess interest heading into the final single-price print. A published imbalance is a late-session report of leftover buy or sell interest heading into the closing match.

How the designated dealer is paid

Designated dealers are paid through transaction fees, billed orders, and their own trading, so their inventory stance is part of how they manage the book.