Quoting Around Scheduled News

An earnings release, a central bank rate decision, an economic data print — these are all events where the market maker knows exactly when the risk arrives, even though it has no idea which way the news will break. That certainty about timing, without certainty about direction, calls for a different kind of quote adjustment than an unscheduled shock does: the desk can prepare in advance rather than merely react.

Widening ahead of the event, not just during it

Because the release time is known, a market maker doesn't wait for the number to print before pulling back. Spreads typically widen and quoted size shrinks in the minutes leading up to the scheduled time, growing more conservative the closer the clock gets to the release, and often the quotes are pulled entirely for a brief window immediately around the print itself, when the fastest participants would otherwise trade against a stale quote before the desk can react. Quoting resumes, usually at a wider spread than normal, once the initial reaction has largely played out and a new fair value has stabilized.

Worked example: a rate-decision timeline

A desk quotes a rate-sensitive stock with a normal 3-cent spread. Thirty minutes before a scheduled central bank announcement, it widens to 6 cents and cuts size in half, reflecting the rising chance that any position taken on now can't be safely held through the release. In the final two minutes, it widens further to 15 cents, and for the ten seconds immediately around the announcement itself, it pulls quotes completely — declining to provide a price at all, since any quote posted in that window would almost certainly be picked off by faster participants reacting to the headline microseconds before the desk can cancel. Once the initial price move settles, typically within a minute or two, the desk resumes quoting, first at a still-wide 10 cents while volatility remains elevated, gradually tightening back toward 3 cents over the following hour as the new information gets absorbed into a stable price.

What this means in practice

Because the timing is known in advance, this is one of the few sources of volatility a market maker can price defensively rather than just react to — the calendar of scheduled releases is public, so desks build automated widening schedules keyed directly to event times rather than relying on a human to notice the clock. The same logic explains why liquidity in options tied to an event visibly dries up into the print and options implied volatility rises sharply beforehand: the market is pricing in the certainty of a jump, just not its direction.