BSE stops stop-loss market orders to check bizarre trades – News18

Leading stock exchange BSE has decided to stop Stop Loss Market (SL-M) orders from October 9 to prevent erroneous order placement due to manual or algo trades. This came after a recent bizarre trading incident earlier this month caused a lot of fear among the trading community due to an SL-M order. SL-M is a type of order in which a security is automatically sold or bought at the market price when the trigger price is reached.

“As a measure to prevent wrong placement of orders, stop loss orders with market conditions in equity segment, equity derivatives segment, currency derivatives segment and commodity derivatives segment will be stopped by the exchange with effect from October 9,” the BSE said in a press release. notification.

Narendra Solanki, Head of Fundamental Research – Investment Services, Anand Rathi Shares and Stock Brokers, welcomed the decision and said it is a good step to avoid erroneous orders and should be beneficial for small and retail traders as such excessive trades are harmful and create unnecessary volatility. on the markets.

“We believe this is a positive and progressive step that will benefit all market participants by improving the trading process and market quality, as SL-M can also lead to extreme price executions during low volumes or when the market price fluctuates sharply,” says Tejas Khoday. , co-founder and CEO of FYERS, said.

This measure will protect traders from such incidents and align its operations with the NSE, which halted SL-M orders in September 2021. Khoday said traders can use Stop Loss Limit (SL-L) orders instead of SL-M orders. An SL order is another type of stop-loss order that only sells or buys a security at the specified price within a specified range. This helps prevent orders from being executed at strike prices during low volumes or sharp market movements.

(This story has not been edited by News18 staff and is published from a syndicated news agency feed – PTI)