Market orders and Market protection range

  • Thursday, 28 October 2021

What are market Orders?

A market order allows you to buy or sell a stock at the best available price in the market.

If you're placing a buy market order, you want to buy a specified quantity of stock from the market at any price available. Similarly, if you're placing a sell market order, you want to sell your stock at any price buyers are willing to buy.

The advantage of market orders is that your trade will execute immediately if there are counterparties i.e. buyers for your sell market order or sellers for your buy market orders. However, the instant order execution comes at the cost of slippage (which means you could be paying slightly more money to buy or getting slightly less money to sell your stocks).

Further to safeguard clients, the exchange has a concept called Trade execution Range (TER) where all market orders executed within the range can refer this circular for details. Essentially a reference price for every F&O contract was arrived at using a theoretical price based on the underlying stock/index price. Based on this reference point, the execution range would be:

  • 5% for all futures contracts
  • Rs. 20 for all options with reference price between Rs. 0.05 to Rs. 50
  • 40% for all options with reference price > Rs. 50

What has changed now?

On August 16th 2021, NSE completely removed execution range I.e. TER within which contracts used to trade. Check this circular issued by exchange.

Since the TER is removed now there are no ranges between which a contract must trade due to this when a market order is placed there are very much high chances of them getting executed at a very random/freak prices causing significant impact on clients

To avoid this we at SAS Online are going to launch Market Price Protection Range(MPPR) for Market orders in which a X% is set from backend as soon as a market order is placed by client system will calculate the Range and will place the order at higher end price and lower end price for Buy and sell orders respectively

For example let’s say LTP of 18300 CE is Rs 100/- and the market protection range is set @10% so the range would be 95-105 so if we place a market buy order it will be placed at Rs 105 and at Rs 95/- for sell order in this way client is saved from the random prices in the market further if anyone wishes to place orders beyond the ranges can place Limit and SL Orders as per there requirements.

Note:- SAS Online will be setting MPPR as 20% w.e.f 29th Oct 2021 for Options.