Page 14 - FINAL CFA SLIDES DECEMBER 2018 DAY 13
P. 14
Session Unit 13:
44. Market Structure & organisation
Executing instructions, p.202
Market orders – Limit orders –
Broker must execute trade immediately at best Places minimum execution price on sell orders and
possible price e.g. new info not yet in share price maximum on buy orders! Risk –what if limit to buy is $50 and
comes in! Could end up with unfavourable price! no one willing to sell? Not fulfilled!
Standing limit orders Limit orders waiting to execute
Marketable or Aggressively priced Limit buy orders above the best ask or limiting sell orders
orders below the best!
tanties
Making and new market or inside the limit order price placed between best bid and best ask
market
Make-the-market limit buy order at best bid or limit sell order price placed
between best bid and best ask
Behind-the-market Buy order with limit price below the best bid price, or a sell
order with a limit price above the best ask price.
Far from the market A limit buy with a price considerably lower than the best bid
price, or a limit sell order with a price significantly higher
than the best ask price.
All-or nothing orders. Execute only if the whole order can be fulfilled Execute only if the whole order can be fulfilled
Hidden orders Only the broker or exchange knows the trade Only the broker or exchange knows the trade size
size
Display size or iceberg orders Only part of the trade trade is visible Only part of the trade is visible
