In what circumstances would an order book open in the Central Limit Order Book following non-opening?

In what circumstances would an order book open in the Central Limit Order Book following non-opening?

• A. There is no longer any market order overhang
• B. A new order is added
• C. A deletion of an existing order causes no change
• D. The session ends

Answer: (A)

In a central limit order book, the transition from a non-opening state to continuous trading happens only when there are no unfilled market orders waiting to be executed. This situation is called having no market order overhang. If such overhang exists, opening the book would force immediate execution of those market orders against resting limit orders, which could cause a sudden, destabilizing price move. Once all market orders that would immediately hit the book are gone, the book can open and normal trading resumes. Adding a new order or deletions that don’t clear the overhang don’t guarantee a safe reopening, because the overhang may still be present. Ending the session halts trading entirely, rather than reopening after a non-opening.

In a central limit order book, the transition from a non-opening state to continuous trading happens only when there are no unfilled market orders waiting to be executed. This situation is called having no market order overhang. If such overhang exists, opening the book would force immediate execution of those market orders against resting limit orders, which could cause a sudden, destabilizing price move. Once all market orders that would immediately hit the book are gone, the book can open and normal trading resumes.

Adding a new order or deletions that don’t clear the overhang don’t guarantee a safe reopening, because the overhang may still be present. Ending the session halts trading entirely, rather than reopening after a non-opening.