What Is Fill or Kill (FOK)?
Fill or kill (FOK) is a conditional type of time-in-force order used in securities purchasing and promoting that instructs a brokerage to execute a transaction in an instant and completely or in no way. This type of order is most steadily used by energetic patrons and is usually for a large quantity of stock. The order must be filled in its entirety or else canceled (killed).
A FOK is in large part an all-or-none (AON) and immediate-or-cancel order (IOC) blended.
Key Takeaways
- A Fill or Kill (FOK) order is an order that is directed to be completed in an instant at the market or a specified price or canceled if no longer filled.
- A FOK order combines an all-or-none (AON) specification indicating it must be filled totally with an immediate-or-cancel (IOC) time period.
- Same old FOK orders ultimate a couple of seconds to cut back disruption to the stock’s price and partial fills are not allowed.
Figuring out Fill or Kill
The purpose of a fill or kill (FOK) order is to make certain that a complete position is completed at prevailing prices in a smartly timed way. And now not the use of a fill or kill designation, it might take a prolonged time frame to complete a large order. Because of such orders are maximum steadily located for large quantities, prolonged execution of the order has the conceivable to reason important changes to a stock’s price and causing market disruption.
On some exchanges, an FOK should be completed inside a few seconds of it being confirmed to the purchasing and promoting community. In this context, {the marketplace} or prohibit order FOK is treated similarly to an “all or none” order with the exception that it is in an instant canceled if no longer completely filled. On other exchanges, an FOK is completed via filling the order with the selection of shares that the main bid or offer makes available. Then, any unfilled balance of shares may well be canceled. In this context, the FOK is a way for a buyer or provider to fill what is imaginable, then cancel the remaining.
If truth be told, then again, the fill-or-kill type of trade does no longer occur very steadily. Other methods of educating a brokerage on the time period during which a trade is to be completed include suggested or cancel (IOC) this means that that to fill all or part of the order in an instant, then cancel any section that can not be filled, and superb ‘til canceled (GTC), which helps to keep an order open until it is able to be filled at a specified price.
Fill or Kill Example
Suppose an investor wants to shop for 1 million shares of Stock XYZ at $15 in step with percentage. If the investor wants to buy 1 million shares fairly in an instant, and no fewer, at $15 (or upper), an FOK order should be located. Suppose the order is located. If a broker has more than 1,000,000 shares in its inventory and would only love to advertise 700,000 shares at the $15 price, the order may well be killed. If the broker is ready to advertise 1 million shares alternatively only a price of $15.01, the order may well be killed.
On the other hand, if the broker is ready to advertise the entire 1 million shares at $15, the order may well be filled in an instant. Moreover, if the broker is ready to advertise the entire 1 million shares at a better price, say $14.99, the order would also be filled.
