Closing Offset (CO) Order

What Is Closing Offset (CO) Order?

A closing offset (CO) order is a type of limit order that a trader can place during the trading day for execution at market close for that day. The trade CO price will constantly be that day's closing price.

Grasping Closing Offset (CO) Order

The closing offset order is a trade type previously made accessible by the New York Stock Exchange (NYSE) in 2009 as a means to offset daily order imbalances at market close. The CO order is a day limit order. The trader determines a price floor for sales or a ceiling for purchases, and on the off chance that the closing price doesn't fulfill that limit price the order is closed without execution. Execution can only occur at the 4:00 market close and at that day's closing price. Traders can cancel a CO order under any circumstance up to 3:45. After 3:45, an order must be canceled due to a blunder. After 3:58, CO orders may not be removed.

A CO order is a specific type of limit-on-close (LOC) order and might be contrasted with limit-on-open orders or market-on-close (or open) orders which don't determine a price.

At market close, the NYSE follows a prioritized protocol to take care of open requests. CO orders yield to any remaining open orders. Inside that day's CO interest, orders are prioritized according to the time at which they were placed. Any CO order that doesn't fulfill the day's imbalance won't be filled. These rules are indistinguishable from those administering market on close (MOC) and limit on close (LOC) orders. CO orders, in any case, must be placed in round parts. CO orders are of specific use to managers of mutual funds intended to follow daily closing index values.

CO Orders and the Closing Auction

Like MOC and LOC orders, CO orders must be filled at market close. This is the culmination of an interaction known as the closing auction, which is especially important to traders as a day's closing price is the most generally distributed share price and is the key data point driving opening trading on the next morning.

At 3:45 on each trading day, the NYSE electronically distributes a summary of open interest on each stock. NYSE rules preclude traders from adjusting their existing CO orders once this information has been distributed, besides in case of genuine mistake. The exchange refreshes closing auction data like clockwork until closing. New CO, MOC, and LOC orders will factor into those updates and can flip the imbalance during the last minutes prior to the closing auction. Key data points in the closing bulletin incorporate imbalance side and quantity, expected indicative match price, and expected paired trade volume at the match price.

Features

• CO orders must be filled at market close at the culmination of an interaction known as the closing auction, which is especially important to keeping an orderly market.
• A closing offset (CO) order is a special order type used to offset any excess open auction imbalances that exist at the closing bell.
• A CO order is basically a limit-on-close (LOC) order that was presented by the NYSE in 2009 to reduce end-of-day order imbalances.