What is the opening price if limit orders on both sides are on equal order size?

What is the opening price if limit orders on both sides are on equal order size?

• A. Arithmetical mean of the prices of the two last-executed orders
• B. Price of the last-executed order
• C. Maximum executable trading volume
• D. Reference price

Answer: (A)

When determining the opening price in an opening auction, the market looks for a price that clears the maximum volume given the orders on both sides. If the limit orders on the buy and sell sides are equal in size, there is a perfectly balanced cross, so the price that clears is halfway between the two most recent executable trades—i.e., the arithmetic mean of the prices of the two last-executed orders. This choice avoids bias toward either side and reflects a fair midpoint when supply and demand are matched equally. The other options don’t fit: taking the price of just the last trade would tilt one way or the other, the maximum executable volume is a quantity, and a reference price is a separate benchmark not used to set the opening cross in this balanced case.

When determining the opening price in an opening auction, the market looks for a price that clears the maximum volume given the orders on both sides. If the limit orders on the buy and sell sides are equal in size, there is a perfectly balanced cross, so the price that clears is halfway between the two most recent executable trades—i.e., the arithmetic mean of the prices of the two last-executed orders. This choice avoids bias toward either side and reflects a fair midpoint when supply and demand are matched equally. The other options don’t fit: taking the price of just the last trade would tilt one way or the other, the maximum executable volume is a quantity, and a reference price is a separate benchmark not used to set the opening cross in this balanced case.