Additional specifications

When working with a customer to place an order, registered representatives must submit order tickets. The ticket describes the order type, the number of shares, the order’s time frame, and any special instructions. Common special instructions include:

All or none (AON)

• Fill all shares or none at all
• Multiple attempts allowed

Immediate or cancel (IOC)

• Fill as many shares as possible
• One attempt allowed

Fill or kill (FOK)

• Fill all shares immediately
• One attempt allowed

Sometimes, only a limited number of shares are available at a given price. For example, a customer places an order to buy 1,000 shares of stock at $50, but only 500 shares are available at $50.

In this case, an all or none (AON) order would not execute until all 1,000 shares were available at $50 or less. With AON orders, the brokerage firm keeps trying to fill the order until the customer cancels it (multiple attempts allowed).

In the same situation, an immediate or cancel (IOC) order would fill the 500 shares available at $50 and then cancel the remaining 500 shares. In other words, the customer wants an immediate execution for as many shares as possible at the specified price. The firm gets one attempt to fill what it can and then cancels the rest.

Fill or kill (FOK) orders are the most stringent. They require the entire order to be filled immediately. In the same situation, because only 500 of the 1,000 shares are available at $50, the order would be canceled.

There are also order instructions that focus on when the trade occurs, not just the price or share amount. If an investor wants to trade at the opening or closing price, they can place a market on open or market on close order.

A market on open (MOO) order fills a customer’s order at the market price when the market opens. A market on close (MOC) order fills at the market price when the market closes. Both orders must be entered at least a few minutes before the market opens (for MOO) or before the market closes (for MOC).

If an investor wants to give the firm discretion to choose the best time and/or price, they can place a not held (NH) order, sometimes called a market not-held order. An NH order might sound like this:

Buy me 100 shares of Target stock (TGT) sometime today.

Here, the investor doesn’t provide price instructions or a specific execution time (other than completing it today). In most cases, NH orders are sent to floor brokers, who decide on timing and/or price based on market conditions.

NH orders are typically completed by the end of the trading day. If the order is not completed, the firm must either cancel it or have power of attorney (POA) on file. As you may recall from the SIE exam, any order that gives time and/or price discretion for more than one day is a discretionary trade and requires a POA. If the firm has a POA, it can continue trying to fill the order the next day. If not, it must cancel the order and wait for the customer to renew it.

Another unique order submission is a proceeds transaction. This involves selling one security and using the sale proceeds to buy another security. Investors often use proceeds transactions when rebalancing their portfolios (selling “overweight” allocations and buying “underweight” allocations).