market architecture of selected stock exchanges in ... - Gilles Daniel
market architecture of selected stock exchanges in ... - Gilles Daniel
market architecture of selected stock exchanges in ... - Gilles Daniel
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343.6 Orders and Order Books3.6.1 Types <strong>of</strong> OrdersA trader gives an order to a broker who, as the trader’s agent, passes the order to asecurities <strong>in</strong>stitution where a trade may be arranged. In order to <strong>in</strong>form the brokerexactly about the <strong>in</strong>vestor’s <strong>in</strong>tention and to be able to implement various <strong>in</strong>vestmentstrategies, the <strong>in</strong>vestor has to specify his order. He has to tell him the exact number<strong>of</strong> shares, if these shares are to be bought or sold and how he should handle the order<strong>in</strong> the <strong>market</strong>. To facilitate trad<strong>in</strong>g and to reduce the risk <strong>of</strong> misunderstand<strong>in</strong>g thereare several standardized types <strong>of</strong> orders available on <strong>stock</strong> <strong>exchanges</strong>.In general, there are two types <strong>of</strong> orders: orders with a price limit and orders withouta price limit. These order types can be further specified through additional executionconditions, validity constra<strong>in</strong>ts and trad<strong>in</strong>g restrictions. S<strong>in</strong>ce the availability <strong>of</strong> ordertypes vary on the respective <strong>stock</strong> <strong>exchanges</strong> the table listed below shows how ordersare characterized and will be illustrated (where applicable) <strong>in</strong> the chapter cover<strong>in</strong>gthe <strong>stock</strong> <strong>exchanges</strong> <strong>in</strong> detail.Table 13: Order Types – Execution Conditions (general)Orders types Acronym Execution condition Trad<strong>in</strong>g PhaseNoneOrders w/oPrice LimitMarketOrderFill or KillOrders with aPrice LimitLimit OrderExecute andElim<strong>in</strong>ateNoneFill or KillExecute andElim<strong>in</strong>ateTable 14: Order Types – Validity Constra<strong>in</strong>t (general)Orders types Acronym Validity constra<strong>in</strong>ts Trad<strong>in</strong>g PhaseNoneOrders w/o MarketGFDOrderPrice LimitGTCOrders with aPrice LimitLimit OrderNoneGFDGTC