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At Deadline

Traders Magazine, December 1998

John A. Byrne

IPO Rule

The National Association of Securities Dealers wants to change how the pre-opening of initial public stock offerings is handled. Seeking to quell criticism that Nasdaq trading practices have contributed to the excessive volatility in recent IPOs for Internet companies, the NASD has approved a rule that would extend from five to 15 minutes the time dealers are allowed during the pre-opening for IPOs. Dealers had previously singled out the five-minute window as insufficient for properly managing orders that pile up in an IPO's pre-opening, and as unhelpful in establishing an opening price. The proposal allows an additional 15 minutes in periods when the market is locked or crossed, where the bids exceed the best advertised offers.

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