Order Entry GuidelinesFormer SEC Chairman Arthur Levitt has said, "What must occur is a greater recognition by investors of their individual responsibility&.Regardless of how frequently a person trades or invests, the opportunity to make these decisions comes with the responsibility to take the time to understand the implications of those decisions."
The following information is provided to help our clients understand some market terms and conditions which can affect the orders which you place on-line. We at Leigh Baldwin & Co., L.L.C., remain committed to providing the best possible tools and accessibility to aid you in managing your investments.
DELAYS AND ACCESSIBILITYEvery trade which is placed on-line is routed to our main office, where it is processed and executed by a registered broker exactly as if you had called one of our brokers directly. Leigh Baldwin & Co., L.L.C., routes all orders through our clearing broker-dealer, National Financial Services Corp. Orders for exchange-listed securities are sent to an exchange specialist for execution. With OTC (over-the-counter), National Financial either executes the order as a Market Maker or routes the order to another Market Maker for execution. Periods of heavy trading and price volatility may result in backlogs of orders and delays in executions. This may result in a significantly higher or lower price than the market price when you entered your trade. During periods of heavy volume, stock quotes which are "real time" may not accurately reflect the current price of the stock.
In the event Internet traffic is heavy and access is delayed, your orders can still be processed by calling your registered representative, calling any local Leigh Baldwin & Co., L.L.C., office, or calling the main office toll free at 1-800-659-8044.
Also, note that you may at times experience a delay in getting an initial trade or cancellation confirmation after your execution or cancellation. This does not mean your order was not executed, and if you re-enter your order you may mistakenly end up with multiple orders that cannot be cancelled. You should also be aware that hitting "cancel" on your computer does not cancel your order. And if you receive an electronic cancellation, it merely means your request was received, not that your order was cancelled. It is only cancelled when the market receives your cancellation order.
TYPES OF ORDERSWith so many more people making their own investment decisions and entering their own trades, the following is a review of the basic BUY and SELL orders, and how they can be modified. Keep in mind that price quotes are for a limited number of shares and only the first orders will be filled at that price. The following guide may help you in minimizing your risk.
Also, please read the information available at the Securities and Exchange Commission (SEC) Investor Education Web page www.sec.gov/invkhome.htm
MARKET ORDER will fill at the best price at the time of entry, for as many shares as are available. The total order may or may not be filled at the same price. In a volatile market, when backlogs may be likely, the price at the time of entry may be different than you expected.
LIMIT ORDER will fill at the limit price, or better if possible, but may not fill for the total quantity before the trading day is over. In a fast-moving market, a limit order reduces your risk, but increases the chance your order will not be filled because the market will have moved beyond your price too quickly for execution.
ALL OR NONE will only fill for the number of shares stated. For instance, if the order was to buy 500 shares at 25 and there were only 400 offered for sale at that price, the trade would not be done.
GTC (good 'til cancelled) will remain an open order until the requirements of the order are filled. The order will expire after 120 days if it has not been filled at your specified price or been cancelled by you.
STOP ORDER will trigger a transaction when the stock trades at the stated price. Once the trade price is triggered, it becomes a market order and may fill above or below your stated price.
STOP LIMIT. With this restriction, a trade at the stop price will trigger a transaction, and becomes a limit order (see above). Since this does not guarantee an execution, this restrictive order should be approached with caution.
MARKET ON CLOSE. This requirement may be placed 20 minutes before the market close and will mean the price will be equal to the last price on the NYSE.
NEXT DAY SETTLEMENT is possible in place of the normal 3-day settlement. It requires that there is a willing party on the other side of the trade, and will cost an extra 1/8 per share.
If you have any questions about any of the trading procedures, or which approach might be best for your objectives, please give us a call and we will be glad to discuss it with you.
Remember the 3 golden rules for investors from SEC Chairman Arthur Levitt:
- Know what you are buying
- Know the ground rules under which you buy and sell a stock or bond
- Know the level of risk you are undertaking