"Expanding limit order protection to the pre-market will provide significant protection to investors," said Frank G. Zarb, Chairman and CEO, of Nasdaq and the NASD. "This demonstrates our commitment to ensuring that trading outside regular market hours is as fair as possible."
A limit order is a customer order to buy or sell a specified number of shares of a security at a specific price.
The expansion of the limit order rule to the pre-market is in response to a dramatic increase in the number of customer orders sent to brokers prior to the market open. In an attempt to service those orders, member firms are increasing their trading in the pre-market to manage order imbalances which can occur when there are too many buy or sell orders without matching orders on the opposite side.
The rule will apply at the customer's discretion. Customers who chose not to expose their orders for execution during the pre-market time period will not be entitled to limit order protection and will have their orders executed during normal market hours.
The Nasdaq Stock Market lists nearly 5,000 companies, has a larger dollar volume, and trades more shares per day than any other U.S. market. Nasdaq is a subsidiary of the National Association of Securities Dealers, Inc. (NASD®), the largest securities-industry, self-regulatory organization in the United States. For more information about Nasdaq, visit the Nasdaq Web site at www.nasdaq.com or the Nasdaq NewsroomSM at www.nasdaqnews.com.
