Imbalance Only Orders (IO)

AAA

DEFINITION of 'Imbalance Only Orders (IO)'

Limit orders that provide liquidity during the opening cross and closing cross on the Nasdaq. Imbalance Only (IO) orders will execute only on the opening cross or closing cross. IO buy orders only execute at or below the 9:30am or 4pm bid price, while IO sell orders only execute at or above the offer price. Before opening/closing crosses are executed, buy/sell IO orders are re-priced to the best bid and ask price, respectively, on the Nasdaq book. IO orders must necessarily be limit orders; market IO orders are not permitted.

INVESTOPEDIA EXPLAINS 'Imbalance Only Orders (IO)'

IO orders are not displayed or disseminated. They neither add to an imbalance, nor do they establish the opening or closing price. Since IO orders are only executable during the opening cross or closing cross, they are not at risk of being executed prior to market open or close, unlike continuous market orders.

IO orders are accepted on the Nasdaq starting from 7am. Market participants cannot update IO orders for the opening cross after 9:28am, or update IO orders for the closing cross after 3:50pm. However, in both cases, new IO orders can still be entered after those deadlines.
 
Note that IO orders can sell short. Sell-short IO orders and sell IO orders priced at or below the best bid price are re-priced to the best offer price at 4pm. During the closing cross, sell-short IO orders are executed on a downtick only if the closing price is better than the best bid; these orders will not participate if the closing price is at or below the best bid.
RELATED TERMS
  1. Off-Floor Order

    An investor's directive to buy or sell securities when that directive ...
  2. Make To Order - MTO

    A business production strategy that typically allows consumers ...
  3. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open ...
  4. Order Imbalance

    A situation resulting from an excess of buy or sell orders for ...
  5. Auction Market

    A market in which buyers enter competitive bids and sellers enter ...
  6. Imbalance of Orders

    A situation when too many orders of a particular type - either ...
Related Articles
  1. A Look At Primary And Secondary Markets
    Investing Basics

    A Look At Primary And Secondary Markets

  2. The Opening Cross: How Nasdaq Stock ...
    Investing Basics

    The Opening Cross: How Nasdaq Stock ...

  3. Understanding Order Execution
    Investing Basics

    Understanding Order Execution

  4. How To Place Orders With A Forex Broker
    Forex Education

    How To Place Orders With A Forex Broker

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center