What Is Don’t Know (DK)?
“Do not know (DK)” is a slang expression for an out industry that is used when there is a discrepancy in the details of a industry. Steadily known as a “DK’d industry,” the expression refers to a situation where a minimum of probably the most occasions involved claims to lack knowledge of a couple of aspect of the industry or “does not know” the industry.
The purpose of an exchange—such since the New York Stock Change (NYSE), Nasdaq, and the London Stock Change (LSE)—is to ensure an organized and atmosphere pleasant marketplace where buyers and sellers can industry financial equipment related to stocks, commodities, and derivatives. When an exchange receives a DK’d industry, it can’t execute the industry on account of contradictory wisdom associated with the industry. The exchange’s clearing area will not be able to settle a DK’d industry given that words of the industry are conflicting or inconsistent.
Key Takeaways
- “Do not know” is a purchasing and promoting expression used to give an explanation for a industry that cannot be completed on account of there is a discrepancy in the details of the industry.
- A “have no idea” industry happens when probably the most occasions disputes or rejects the industry on account of any number of reasons, related to an inconsistency in the cost or number of shares.
- This tactic is sometimes used as a unethical switch to get out of a industry when {the marketplace} goes against the broker.
- The Securities and Change Price (SEC) outlines laws of procedure when a industry is DK’d.
Understanding Don’t Know (DK)
When a broker places an order to buy or advertise a security, the settlement or crowning glory of the industry does not occur robotically. A clearing area acts as an intermediary that reconciles the order between the transacting occasions, transferring the securities to the patron and the cash to the seller. This process can take a lot of days or longer to complete after the original placement of the industry. In some cases, the industry would perhaps fail to clear only.
A DK’d industry would possibly finally end up when probably the most occasions to a industry has a dispute or rejects a industry for any number of reasons. They would possibly not have the industry in their information or there may be a discrepancy with the cost, number of shares, or CUSIP amount. Occasionally it may be on account of misdirected instructions from one party to the other. Every so often, a party would perhaps use this tactic to get out of a industry when {the marketplace} moves against them, which has been well-known as an unscrupulous tactic throughout the financial sector.
The SEC Laws for DK’d Trades
The Securities and Change Price (SEC) provides certain laws and procedures for DK’d trades achieved on the Nasdaq stock market in its Uniform Practice Code. The rules specify that any contract that has been DK’d thru an opposing party or that has been deemed DK’d underneath the rules of supplier may be closed out in the course of the party that submitted the contract without any notice throughout not unusual purchasing and promoting hours.
The rules move without delay to state each and every party must put up a Uniform Comparison or Confirmation inside of a trade day and the ones comparisons or confirmations can also be compared to make a decision if any discrepancy undoubtedly does exist regarding the DK’d industry. If most straightforward the claiming party submits a comparison or confirmation, the other party can be notified and has 4 trade days to respond. If they do not, then the claiming party has no further criminal duty on the DK’d industry.
A confirmation or comparison must include particular wisdom outlined in the course of the SEC. This includes a description of the security, the cost at which the transaction used to be as soon as made, and any other particular phrases that be in agreement make a decision the details of the industry.
If buyers are purchasing and promoting through an virtual purchasing and promoting platform, oftentimes they’re going to be notified by way of the platform’s particular code {{that a}} industry has been DK’d.
Example of Don’t Know (DK)
There are many ways a industry can be well-known as DK’d. For instance, corporate XYZ buys 1,500 shares of ABC stock from corporate X. When corporate X delivers the stock to corporate XYZ, corporate XYZ would perhaps reject the industry (DK it) if the words of the availability (price, quantity, or particular protection) don’t are compatible their information, or if the industry is not on their information the least bit.
