Knowledge
Rules for placing orders and order types
Limit orders (LIMIT orders)
Phases and session systems:
LIMIT orders can be placed:
1. in the continuous quotation system
a. in the pre-opening phase,
b. in the continuous quotation phase,
c. in the pre-closure phase
d. in the overtime phase,
2. in the single course system
a. in the pre-opening phase
b. in the overtime phase
A LIMIT order contains a price limit and can only be executed at the price specified in that limit, or:
· at a lower price — in the case of a buy order,
· at a higher price — in the case of a sales order.
Example:
In the sheet there are 2 orders to sell shares of company X
Sale 100 pcs. with a price limit of 10zł
Sale 100 pcs. with a price limit of 11zł
The investor places a limit buy order: purchase of 120 shares of company X with a price limit of PLN 12.
Since there are orders on the market with a price more favorable to the investor, transactions are concluded with lower price than specified in the limit by the investor:
1. Buy 100 pcs. x 10zł
2. Purchase 20 pcs. x 11zł
The average purchase price of 120 shares of company X amounted to PLN 10.17 for the investor
Example:
In the sheet there are 2 orders to buy shares of company X
Buy 100 pieces with a price limit of 20zł
Buy 100 pieces with a price limit of 15zł
The investor places a LIMIT sell order: sale of 150 shares of company X with a price limit of PLN 12.
Since there are orders on the market with a price more favorable to the investor, transactions are concluded with higher price than specified in the limit by the investor:
1. Sale 100pcs x 20zł
2. Sale 50 pcs x 15zł
The average sale price of 150 shares of the company x amounted to PLN 18.33 for the investor
Priority of execution of LIMIT orders:
Priority in implementation is given to:
· in the case of buy orders - orders with a higher price limit,
· in the case of sell orders - orders with a lower price limit
Orders with the same price limit are accepted into the order sheet and then executed according to the priority of the acceptance time in such a way that the orders accepted/disclosed earlier are executed in the first place.
Example:
The following orders have been entered into the sheet:
At 9:02am, an order to sell 50 shares of company X with a price limit of PLN 10
At 9:03am, an order to sell 50 shares of company X with a price limit of PLN 11
At 9:04am, an order to sell 50 shares of company X with a price limit of PLN 10
At 9:05am an order to sell 50 shares of company X with a price limit of PLN 12
The investor places an order: purchase of 75 shares of company X with a price limit of PLN 11
Two transactions are concluded:
Buy 50 pcs. at the price of 10zł
Buy 25 pcs. at the price of 10zł
Due to the priority of the price, the investor concluded transactions with the best orders regardless of the moment they were placed on the exchange.
Any price orders (PKC orders)
Phases and session systems:
PKC orders can be placed:
1. in the continuous quotation system
a. in the pre-opening phase,
b. in the continuous quotation phase,
c. in the pre-closure phase
2. in the single course system
a. in the pre-opening phase
The PKC order does not contain a price limit.
In the continuous trading phase, a PKC order is executed at the best possible prices of opposing orders pending execution in the order sheet. The unexecuted part of the PKC order remains in the order sheet.
Example:
The sheet contains orders for the sale of shares of company X
Sale of 100 shares of company X with a price limit of PLN 10
Sale of 100 shares of company X with a price limit of PLN 12
Sale of 100 pcs. shares of company X with a price limit of 13zł
Sale of 100 shares of company X with a price limit of 14zł
The investor places a buy order of type PKC: purchase of 350 shares of X PKC
Since there are opposite orders in the market, transactions are concluded with prices currently available on the market:
Buy 100 pcs.x 10zł
Purchase of 100 pcs. X12PLN
Purchase of 100 pcs. X 13zł
Purchase of 50 pcs. X 14zł
Average purchase price of 350 shares of Xwyniesła for an investor 12 PLN
PKC orders have the same execution priority as PCR orders and the same as PCR orders have the highest priority of implementation due to the price.
In the event that there are unexecuted PKC and PCR orders in the order sheet, the order of their execution is determined by the priority of the time of their admission to the sheet.
Market orders (PCR orders)
Phases and session systems:
PCR orders can be placed:
1. in the continuous quotation system
a. in the pre-opening phase,
b. in the continuous quotation phase,
c. in the pre-closure phase
2. in the single course system
a. in the pre-opening phase
The PCR order does not include a price limit.
In the continuous quotation phase, the PCR order is executed after the best possible price of the counter order waiting for execution in the order sheet.
In the case Partial execution of PCR order, unfulfilled part of this order is converted into a LIMIT order with a price limit equal to the rate at which the last transaction was concluded.
Example:
The sheet contains orders for the sale of shares of company X
Sale 100 pcs. with a price limit of 10zł
Sale 100 pcs. with a price limit of 12zł
Sale 100 pcs. with a price limit of 13zł
The investor places a buy order of the PCR type:
Purchase of 350 shares of the company x PCR
Since there are opposite orders in the market, a deal is concluded with the best the price currently available on the market:
Buy 100 pcs. x 10zł
The remaining, unfulfilled part of the order, pending in the sheet as an order TYPE with the price of the last transaction i.e. 250 pcs. with a price of PLN 10.
In the continuous quotation phase, at the time of acceptance of the PCR order in the order sheet, it must wait for the execution of at least one counter order, otherwise the PCR order is rejected.
Example:
In the sheet, in the continuous quotation phase, there are orders to sell shares of company X
Sale 100 pcs. with a price limit of 10zł
Sale 100 pcs. with a price limit of 12zł
The investor places an order to sell PCR:
Sale of 350 shares of the company x PCR
Since there are no opposite orders in the market, the sell order is rejected and does not enter the order sheet
PCR orders have the same execution priority as PKC orders and the same as PKC orders
-have the highest priority of execution due to the price.
In the event that there are unexecuted PKC and PCR orders in the order sheet, the order of their execution is determined by the priority of the time of their admission to the order sheet.
If a PCR order is not executed in the single rate system in the opening phase, then this order (or its unexecuted part) is converted after this phase into a LIMIT order with a price limit equal to the single rate.
If in a continuous quotation system:
a) in the opening phase, the PCR order will not be executed this order (or its unexecuted part) is converted after this phase into a LIMIT order with a price limit equal to the opening rate,
b) in the closing phase, the PCR order will not be executed, then this order (or its unexecuted part) is converted after this phase into a LIMIT order with a price limit equal to the closing price.
In the event that an opening/closing phase is followed by a balancing, the conversion of the PCR order (or the unexecuted part thereof) into a LIMIT order occurs after the completion of this balancing.
Stop orders (STOP orders)
Phases and session systems:
STOP orders can be placed:
1. in the continuous quotation system
a. the pre-opening phase
b. the opening phase
c. continuous quotation phase
d. the pre-closure phase
e. Closing phase
2. in the single course system
a. the pre-opening phase
b. the opening phase
STOP LIMIT incorporates activation limit orders and price limitafter which the order may be executed
STOP-LOSS incorporates activation limit and execution order without a specified price limit
At the time of admission to the sheet activation limit The STOP order must be:
· higher (in the case of buy orders)
· lower (for sales orders)
from the price of the last trade in a given trading sessionand in the event that no transaction has been concluded at the given session - from the reference rate for the opening rate in the continuous quotation system or, as appropriate, from the reference rate for the single rate.
Example:
The last transaction concluded on the shares of company X was made at a price of PLN 10.
The investor issues a STOP order. In order for the order to be accepted by the exchange, the activation limit in the order should be:
1. above PLN 10 when placing a STOP buy order
2. below 10 PLN for a STOP sales order
Execution limit In the STOP order, there must be
· equal to or higher (in the case of buy orders)
· equal to or lower (in the case of sales orders)
from the activation limit of that order, unless, instead of the execution limit, the STOP order contains an execution order without a specified price limit (stop loss order).
Example:
The last transaction concluded on the shares of company X was made at the price of 10 PLN.
1. The investor wants to place a STOP LIMIT sell order, with an activation limit 9 PLN.
In order for the order to be accepted by the exchange, the execution limit in the order should be specified as $9 or less.
2. The investor wants to place a buy order of the STOP LIMIT type, with an activation limit 11 PLN.
In order for the order to be accepted by the exchange, the execution limit in the order should be specified as $11 or more.
If the order is activated:
· STOP Loss this order is added to the order sheet as an order PKC,
· STOP Limit this order is added to the order sheet as an order LIMIT.
A STOP order is subject to activation (disclosure in the order sheet) if the rate of the last trade is:
· greater than or equal (in the case of buy orders) to the activation limit
· either less than or equal (in the case of sell orders) to the activation limit
A STOP order that meets the activation conditions is disclosed in the order sheet immediately after the execution of orders without an activation limit.
Example:
The investor placed on the stock exchange an order to sell shares of company X of the STOP LIMIT type, specifying the activation limit as PLN 10 and the execution limit as PLN 9.
The current market price of the shares is PLN 12.
If:
1. A transaction at a price of PLN 10 or lower will not be concluded on the exchange, this order will not be subject to activation
2. A transaction will be concluded on the exchange at a price of PLN 10 or lower, this order will enter the sheet as a LIMIT order with a limit of PLN 9
Example:
The investor placed on the stock exchange an order to sell shares of company X type STOP LOSS, specifying the activation limit as PLN 10
The current market price of the shares is PLN 12.
If:
1. A transaction at a price of PLN 10 or lower will not be concluded on the exchange, this order will not be subject to activation
2. A transaction will be concluded on the exchange at a price of PLN 10 or lower, this order will enter the sheet as a PKC order
The order of activation of STOP orders is determined by the order activation limit, and in the case of orders with the same activation limit, the time of acceptance of the order on the exchange.
The priority of executing activated STOP orders with the same price limit or orders with an order execution order without a specified price limit is determined by the order activation time.
Orders with a variable execution limit (PEG orders)
Phases and quotation systems:
PEG orders can only be placed in the continuous quotation phase.
PEG orders are not accepted and accepted ones expire:
a) in the continuous quotation phase — if there are no orders with a price limit on the same side of the order sheet,
(b) in the event of suspension of circulation,
c) in the pre-opening/pre-closing phase,
d) in the overtime phase,
e) when balancing.
A PEG order contains a price limit that takes a value equal to the price limit of the best order on the same side of the order sheet.
Example:
In the sheet, in the continuous quotation phase, there are orders to sell shares of company X:
Sale 100 pcs. with a price limit of 10zł
Sale 100 pcs. with a price limit of 12zł
The investor places an order to buy shares of company X type PEG:
Purchase of 350 X PEG shares
Since there are no orders on the same side of the (buy) sheet on the market, the PEG buy order is rejected and does not enter the order sheet
Example:
In the sheet, in the continuous quotation phase, there are orders to sell shares of company X
Sale 100 pcs. with a price limit of 10zł
Sale 100 pcs. with a price limit of 12zł
The investor places an order to sell shares of company X type PEG:
Sale of 350 X PEG shares
Since there are orders on the same side of the sheet (sale) on the market, the PEG order “connects” to the first (with the lowest price limit) order and with it waits for execution with a price of PLN 10.
If the issuer of the original LIMIT order changes the price limit to PLN 9, the PEG order will follow this change and will also accept the price limit of PLN 9.
A PEG order may contain an additional (fixed) price limit:
a) maximum — for purchase orders,
b) minimum — for sales orders
— after exceeding which the basic (variable) price limit in the PEG order ceases to be updated automatically.
The additional price limit limits the automatic update of the basic (variable) price limit of this order until:
· the price limit in the best buy order is higher than this additional limit in the PEG order,
· the price limit in the best sell order is lower than this additional limit in the PEG order.
The automatic update of the basic (floating) price limit in a PEG order is resumed if:
a) the price limit on the best buy order on the order sheet will fall below the maximum additional price limit in the PEG order
—where the PEG order is a buy order,
b) the price limit in the best sell order will rise above the minimum additional price limit in the PEG order
— where the PEG order is a sell order.
A PEG order loses its acceptance time priority each time its base (floating) price limit is updated.
A PEG buy order loses its acceptance time priority each time:
(a) as a result of the addition or modification, its additional price limit is/becomes lower than the price limit of the best buy order existing on the sheet, or
(b) its additional price limit, which before the modification was lower than the price limit of the best buy order existing on the sheet, is subject to change.
Example:
In the sheet, in the continuous quotation phase, there are orders to sell shares of company X
Sale 100 pcs. with a price limit of 10zł
Sale 100 pcs. with a price limit of 12zł
The investor places an order to sell shares of company X type PEG with a maximum limit of PLN 9:
Sale of 350 X PEG shares
Since there are orders on the same side of the sheet (sale) on the market, the PEG order “connects” to the first (with the lowest price limit) order and with it waits for execution with a price of PLN 10.
If the issuer of the original LIMIT order changes the price limit to PLN 8, the PEG order will follow this change, however due to the minimum execution limit will be expected with a price of 9 PLN.
Additional types of order validity in brokerage
Orders marked “Execute and Cancel” (WIA)
Orders with the WIA condition may only be placed:
1. in the continuous quotation system,
a. in the continuous quotation phase,
b. in the overtime phase,
2. in the single course system
a. in the overtime phase
An order marked WIA is valid until the first trade is concluded on its basis (or the first transactions if the order is executed simultaneously in multiple transactions), with the unexecuted part of the order becoming invalid.
If, after accepting a WIA order, there are no counter price limit orders in the order sheet that allow you to trade at a rate that complies with the limits of exchange rate fluctuations, the WIA order is invalid.
Example:
The sheet contains orders for the sale of shares of company X
Sale 100 pcs. with a price limit of 10zł
Sale 100 pcs. with a price limit of 12zł
Sale 100 pcs. with a price limit of 13zł
Investor places a limit buy order and WIA additional condition
Purchase of 350 shares of company X with a limit of PLN 10+condition WIA 200 pcs.
There are opposite orders in the market. Only 100pcs can be made immediately,
accordingly, the order is partially executed, and the rest is canceled and does not go to the sheet.
Example:
The sheet contains orders for the sale of shares of company X
Sale 100 pcs. with a price limit of 10zł
Sale 100 pcs. with a price limit of 12zł
Sale 100 pcs. with a price limit of 13zł
Investor places a limit buy order and WIA additional condition
Purchase of 350 shares of company x with a limit of PLN 9+ condition WIA 100 pcs.
There are opposite orders in the market. Not a single piece can be executed immediately, therefore the order is canceled and does not go to the sheet.
Execute or Cancel (WLA) orders
Orders with the WLA condition may only be placed:
1. in the continuous quotation system,
a. in the continuous quotation phase,
b. in the overtime phase,
2. in the single course system
a. in the overtime phase
An order marked WLA is valid until a transaction is concluded on its basis (one or more if the order is executed simultaneously in multiple transactions), but the order must be executed in full or not executed at all.
If, after accepting an order marked WLA, there are no counter orders in the order sheet with a price limit that allows you to trade at a rate consistent with the limits of exchange rate fluctuations, the order marked WLA expires.
Example:
The sheet contains orders for the sale of shares of company X
Sale 100 pcs. with a price limit of 10zł
Sale 100 pcs. with a price limit of 12zł
Sale 100 pcs. with a price limit of 13zł
The investor places a limit buy order and an additional condition WLA
Purchase of 350 shares of company X with a limit of PLN 10+condition WLA 200 pcs.
There are opposite orders in the market. Only 100pcs can be made immediately,
therefore, the order is not executed and does not enter the order sheet
Example:
The sheet contains orders for the sale of shares of company X
Sale 100 pcs. with a price limit of 10zł
Sale 100 pcs. with a price limit of 12zł
Sale 100 pcs. with a price limit of 13zł
The investor places a limit buy order and an additional condition WLA
Purchase of 350 shares of company x with a limit of 9 PLN + condition WLA 100 pcs.
There are opposite orders in the market. Not a single piece can be executed immediately, therefore the order does not go to the sheet at all.
Additional conditions for order execution in brokerage
Orders with minimum execution size condition (orders with MWW condition)
Phases and session systems:
Orders with the condition MWW may be placed on the exchange only:
1. in the continuous quotation system
a. in the continuous trading phase, excluding market balancing periods
b. in the overtime phase,
2. in the single course system
a. in the overtime phase
An order with the condition MWW is executed in whole or in part at least in the amount specified in the condition.
In the event that the order layout in the sheet does not allow immediate execution of an order with the condition MWW at least in the amount specified in the condition, this order is invalid
(Example 1)
The unexecuted part of the order with the MWW condition remains in the order sheet as a brokerage order without a minimum execution size condition.
(Example 2)
Example:
The sheet contains orders for the sale of shares of company X
Sale 100 pcs. with a price limit of 10zł
Sale 100 pcs. with a price limit of 12zł
Sale 100 pcs. with a price limit of 13zł
The investor places a LIMIT buy order and an additional condition MWW
Purchase of 350 shares of company X with a limit of PLN 10+condition MWW 200 pcs.
There are opposite orders in the market. Only 100pcs can be made immediately,
as a result, the order expires and no transaction is concluded.
Example:
The sheet contains orders for the sale of shares of company X
Sale 100 pcs. with a price limit of 10zł
Sale 100 pcs. with a price limit of 12zł
Sale 100 pcs. with a price limit of 13zł
The investor places a LIMIT buy order and an additional condition MWW
Purchase of 350 shares of company X with a limit of PLN 10+condition MWW 100 pcs.
There are opposite orders in the sheet. 100pcs can be executed immediately, so this condition is met and the transaction is concluded:
Purchase of 100 shares of company X at PLN 10
The remaining, unexecuted part of the order is pending on the buy side sheet as
purchase order 250pcs. with a limit of 10zł.
An order with the condition MWW may additionally contain a condition for the amount to be disclosed (the condition of the WUJ).
Orders with the condition of the volume to be disclosed (orders with the condition of the PMI)
Phases and session systems:
Orders with the condition of the WUJ can be placed on the stock exchange at all phases of the session:
1. in the continuous quotation system
a. in the pre-opening phase,
b. in the continuous quotation phase,
c. in the pre-closure phase
d. in the overtime phase,
2. in the single course system
a. in the pre-opening phase
b. in the overtime phase
The value of the order with the condition of the UJ at the time of its submission to the stock exchange may not be less than:
1) PLN 50,000 — for shares and other financial instruments quoted in PLN, subject to point 2),
2) PLN 2,000 — for debt financial instruments quoted in PLN,
3) EUR 10,000 — for all financial instruments quoted in euro.
The value of the order with the condition of the UJ is considered to be:
1) for debt financial instruments — the product of volume, price expressed as a percentage of nominal value and unit nominal value,
2) for futures contracts — the product of the volume, the price of the futures contract and the multiplier,
3) for options — the product of the volume, the execution rate of the option and the multiplier,
4) for other financial instruments, the product of volume and price.
The Disclosed Volume condition determines how much of the order volume is disclosed in the order sheet.
The size of the order to be disclosed cannot be less than 10 trading units.
Example:
The investor places a limit purchase order with an additional condition of 15pcs.
Purchase of 35000 shares of company x with a limit of PLN 10+condition of the VAT 15 pcs
Despite the large order volume, only 15 items are visible in the order sheet.
Subsequent parts of the order are disclosed after the execution of the previously disclosed part of the order. Where the last part of the order is less than the disclosed amount, the remaining part of the order is disclosed.
The unfulfilled parts of the orders remain in the sheet with the condition of the UJ.
In the case of orders with the same price limit, the order of disclosure of the order with the condition of the WUJ determines the time of acceptance of the order on the exchange.
For orders with the same price limit, the order of execution of the size of the disclosed order is determined by the time of its disclosure in the sheet.
An order with the condition of the WUJ may additionally contain the condition of the minimum execution size (condition MWW).