FINRA Series 7Processes and Confirms TransactionsMedium
A customer instructs the representative that a sell order for 2,000 shares must be executed in its entirety immediately, or the entire order should be cancelled at once. Which order type matches this instruction?
- ANot held order
- BDay order
- CAll-or-none order
- DFill-or-kill order
Show answer & explanationAnswer & explanation
Correct answer: D. Fill-or-kill order
A fill-or-kill (FOK) order requires the entire order to be executed immediately in full; if it cannot be filled in its entirety right away, the whole order is cancelled instantly.
Why the other options are wrong
- A. Not held orders give the broker time/price discretion, unrelated to the immediate all-or-nothing requirement.
- B. A day order simply expires at the end of the trading day if unfilled, not the same requirement.
- C. AON allows the order to remain open waiting for a full-size fill; it does not require immediate execution.
Fill-or-Kill (FOK) Order
An order that must be executed immediately and completely, or it is automatically cancelled.
- Immediate execution required
- All-or-nothing quantity requirement
- If not fully executable right away, order is killed
Memory trick: FOK: Fill it Or Kill it — now, no waiting!