BROWSE

Off-Floor Order

What is 'Off-Floor Order'

An investor's directive to buy or sell securities when that directive is given to a broker, not to a trader working on the trading floor of an exchange. Exchange rules require off-floor orders, which are made on behalf of customers, to be executed before on-floor orders, which are made for exchange members'own accounts. In some cases, an off-floor order can be reclassified as an on-floor order where a conflict of interest might exist.

Explaining 'Off-Floor Order'

To be a floor trader, one must be associated with a member firm. Member firms pay hefty fees for the privilege of trading on the floor.


Further Reading


Market vs. limit orders: The SuperDOT evidence on order submission strategy
www.jstor.org [PDF]
… That is, off-floor traders cannot profitably operate as quasi-dealers in competition with the specialist and other floor traders … Expired orders are handled in a similar fashion. An expired buy order is assumed filled at the closing ask price; an expired sell order at the closing bid …

The trades of NYSE floor brokersThe trades of NYSE floor brokers
www.sciencedirect.com [PDF]
… That is, off-floor traders cannot profitably operate as quasi-dealers in competition with the specialist and other floor traders … Expired orders are handled in a similar fashion. An expired buy order is assumed filled at the closing ask price; an expired sell order at the closing bid …

Market making, the tick size, and payment-for-order flow: theory and evidenceMarket making, the tick size, and payment-for-order flow: theory and evidence
www.jstor.org [PDF]
… That is, off-floor traders cannot profitably operate as quasi-dealers in competition with the specialist and other floor traders … Expired orders are handled in a similar fashion. An expired buy order is assumed filled at the closing ask price; an expired sell order at the closing bid …

Order dynamics: Recent evidence from the NYSEOrder dynamics: Recent evidence from the NYSE
www.sciencedirect.com [PDF]
… That is, off-floor traders cannot profitably operate as quasi-dealers in competition with the specialist and other floor traders … Expired orders are handled in a similar fashion. An expired buy order is assumed filled at the closing ask price; an expired sell order at the closing bid …

NYSE order flow, spreads, and informationNYSE order flow, spreads, and information
www.sciencedirect.com [PDF]
… That is, off-floor traders cannot profitably operate as quasi-dealers in competition with the specialist and other floor traders … Expired orders are handled in a similar fashion. An expired buy order is assumed filled at the closing ask price; an expired sell order at the closing bid …

The role of floor brokers in the supply of liquidity: An empirical analysisThe role of floor brokers in the supply of liquidity: An empirical analysis
onlinelibrary.wiley.com [PDF]
… That is, off-floor traders cannot profitably operate as quasi-dealers in competition with the specialist and other floor traders … Expired orders are handled in a similar fashion. An expired buy order is assumed filled at the closing ask price; an expired sell order at the closing bid …

Financial innovations and the organisation of stock market tradingFinancial innovations and the organisation of stock market trading
ojs.uniroma1.it [PDF]
… That is, off-floor traders cannot profitably operate as quasi-dealers in competition with the specialist and other floor traders … Expired orders are handled in a similar fashion. An expired buy order is assumed filled at the closing ask price; an expired sell order at the closing bid …

Order flow, dealer profitability, and price formationOrder flow, dealer profitability, and price formation
www.sciencedirect.com [PDF]
… That is, off-floor traders cannot profitably operate as quasi-dealers in competition with the specialist and other floor traders … Expired orders are handled in a similar fashion. An expired buy order is assumed filled at the closing ask price; an expired sell order at the closing bid …

Constructing a market, performing theory: The historical sociology of a financial derivatives exchangeConstructing a market, performing theory: The historical sociology of a financial derivatives exchange
www.journals.uchicago.edu [PDF]
… That is, off-floor traders cannot profitably operate as quasi-dealers in competition with the specialist and other floor traders … Expired orders are handled in a similar fashion. An expired buy order is assumed filled at the closing ask price; an expired sell order at the closing bid …

Should securities markets be transparent?Should securities markets be transparent?
www.sciencedirect.com [PDF]
… That is, off-floor traders cannot profitably operate as quasi-dealers in competition with the specialist and other floor traders … Expired orders are handled in a similar fashion. An expired buy order is assumed filled at the closing ask price; an expired sell order at the closing bid …



Q&A About Off-Floor Order


How can these conflicts be resolved ?

In some cases, if there is a conflict between customer and member interests, the trade will be reclassified as an on - floor order .

What is an off-floor order?

An off-floor order is a directive to buy or sell securities when that directive is given to a broker, not to a trader working on the trading floor of an exchange.

What are some examples of off-floor orders?

Examples of off-floor orders include limit orders and stop loss orders.

How does an investor's trade become classified as an on- or off- floor order?

Exchange rules require all customers'orders be executed before any member firm'sorders.

Where do most investors place their trades?

Most investors place their trades with brokers, not traders on the trading floor.

Who makes off-floor orders?

Investors make off-floor orders.

Are there any conflicts of interest in this situation?

Yes, there can be conflicts of interest in this situation because members may have access to information about other firms'trades that customers do not have access to.

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