Not-Held Order

A not-held order is a market or limit order that gives the broker or floor trader both time and price discretion to get the best possible price. 

An investor placing a not-held order exhibits an excellent faith that the floor trader can attain a better market price than the current one. Although the floor trader has price and time discretion, he or she is not responsible for any losses that the shareholder may suffer because of this type of order. Often a not-held order is used for international equities as shareholders trust a trader's judgment more than their own. The opposite of a not held order is a held order, which traders must execute immediately.

• Market Not-Held Order: This is a market order that the investor does not want executed immediately. For example, an investor might give the trader a market not-held order to buy 1,000 Apple (AAPL) with an instruction to execute the order at the best price they can get before the market close.                                                                                                                                                                                              
• Limit Not-Held Order: An upper or lower limit is attached to this type of not-held order. For instance, a broker may receive a limit not-held order to buy 1,000 AAPL with an upper limit price of $200. This means the broker can execute the order at any price he or she sees fit, providing they don’t pay over $200. If the order were to sell the stock, the investor would set a lower limit price that the broker could not sell below. The broker is not held responsible if the order does not get executed and the stock goes on to trade above or below the set limit price.

Traders can read order flow and see trading patterns, which often gives them an edge when determining the best price and time to execute a customer’s order. For example, a trader may notice a reoccurring volume size on the buy side of the order book that suggests a stock’s price is likely to continue rising. This would result in the trader executing a client’s not-held order sooner, rather than later. They may also have other customer orders that they can cross simultaneously.

Once the investor gives a not-held order to the trader, they are placing full confidence in that individual to execute the trade at the best possible price. The investor cannot dispute the trade execution, providing the broker met all regulatory requirements. For instance, if a shareholder thinks the trader shouldn't have executed their not-held order before an FOMC interest rate announcement, they cannot seek a rebooking.

(To learn more, see: Introduction to Order Types.)