Stock Price Formulation
Why are special quotes sometimes not renewed to their daily limit prices?
Update : May 12, 2011
Answer:
Special quotes cannot be renewed beyond the price of the order which originally prompted the SQ.
| Offer |
Price |
Bid |
Let's assume that a buy order for 1,000 shares is placed during zaraba trading, at a limit price of 995 yen, 45 yen higher than the last executed price of 950 yen. As there is no matching order it cannot be executed. |
|
M.O. |
|
| 100 |
1,010 |
|
|
995 |
1,000 |
|
980 |
|
|
965 |
|
|
950 |
|
| Offer |
Price |
Bid |
So a bid SQ of 965 yen is indicated, to alert investors to the existence of an order above the most recently executed price. |
|
M.O. |
|
| 100 |
1,010 |
|
|
995 |
1,000 |
|
980 |
|
|
965 S |
|
|
950 |
|
| Offer |
Price |
Bid |
If a matching order is not received after 3 minutes, the SQ is renewed to 980yen, and if necessary to 995yen after a further 3 minutes. The SQ will remain at this price until a sell order is received. The SQ cannot be raised to a level beyond the original order (995yen). |
|
M.O. |
|
| 100 |
1,010 |
|
|
995 S |
1,000 |
|
980 |
|
|
965 |
|
|
950 |
|
