FINRA Series 7Processes and Confirms TransactionsMedium
A customer enters an order to sell 10,000 shares of a thinly traded stock and tells the representative that whatever portion cannot be executed immediately should be canceled, but partial fills are acceptable. Which order type should be entered?
- AImmediate-or-cancel (IOC) order
- BDay order
- CAll-or-none (AON) order
- DFill-or-kill (FOK) order
Show answer & explanationAnswer & explanation
Correct answer: A. Immediate-or-cancel (IOC) order
An IOC order requires that all or part of the order be executed immediately, with any unfilled balance automatically canceled—matching the customer's instructions exactly.
Why the other options are wrong
- B. A day order simply expires at the end of the trading day and has no immediacy requirement.
- C. AON allows the order to remain open until it can be filled in full, with no immediate-execution requirement.
- D. FOK requires the entire order be filled immediately or the whole order is canceled—no partial fills allowed.
Immediate-or-Cancel (IOC) Order
An order requiring immediate execution of all or part of the order, with any unexecuted portion automatically canceled.
- Partial fills are acceptable, unlike FOK
- No portion remains open after the immediate attempt
- Contrast with AON, which can remain working until fully filled
Memory trick: IOC: take what you can get, kill the rest, right now.