A compliance officer at a member firm is reviewing trade execution qualifiers and time-in-force instructions for customer accounts. Which of the following statements regarding Fill-or-Kill (FOK), All-or-None (AON), and Market-on-Close (MOC) orders are correct?
- A Fill-or-Kill (FOK) order requires that the entire quantity of stock be filled immediately upon entry; if complete execution cannot be achieved right away, the entire order is canceled.Answer
- An All-or-None (AON) order mandates that the full size of the order be executed, but unlike an FOK order, it does not require immediate execution and can remain active until filled or canceled.Answer
- CAn All-or-None (AON) order automatically triggers a market order as soon as a transaction occurs at or past the specified activation price.
- DA broker-dealer executing a Market-on-Close (MOC) order acts as a dealer guaranteeing execution at the lowest price of the trading day.
Answer
The statements confirming that Fill-or-Kill (FOK) orders require immediate complete execution or cancellation, and that All-or-None (AON) orders require full execution without requiring immediate execution, are correct.
Fill-or-Kill (FOK) orders mandate both full size execution and immediate fulfillment; if both conditions cannot be met immediately, the entire order is canceled. All-or-None (AON) orders also mandate full size execution, but unlike FOK, they do not require immediate execution and can remain open until executed or canceled.
Step-by-Step Solution
Key Concept
Order Qualifiers and Time-In-Force Instructions