Designated Order Turnaround

Posted in Finance, Accounting and Economics Terms, Total Reads: 294
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Definition: Designated Order Turnaround

It is an electronic order entry system to route orders (market orders and limit orders) from investors to a specialist located on the trading floor instead of routing orders through a broker. The user can be a broker of an investor who enters the order in the system which them immediately goes to the specialist. Investors then receive a report on a real time basis to confirm the order execution through the same electronic circuit from which the orders were made. This is used by the New York stock Exchange. This is also known as SuperDOT. This was upgraded form DOT (designated order system).


This efficiency of orders is increased by routing them directly to a specialist. Based on the size large buy or sell orders are transmitted immediately and the execution occurs quickly. This is commonly used for small orders, limit order and basket orders.


An order is an instruction to buy or sell securities in a market (stock, bond or commodity). These instructions can be easy or complicated and they are sent via a broker or directly by an investor.


A market order is an order i.e. buy or sell which is executed the current market prices. When the orders have to be executed with certainty market orders are used because they have a priority over price. There is no control over price. It is executed at the best price in the market at the appropriate time. The last price quoted before entering the order may be different from the price paid or received because of the fast movement of the markets.


A Limit order is a specification which stipulated to a ceiling price to buy a security and a floor to sell a security. Rather than certainty of execution as in market order here the control is over price at which the trade is executed. Sometimes the order may not be fulfilled.


E.g. If a stock has an ask price of $85 a buy order with a limit of $91 can be executed immediately. If a stock has bid price at $85, a sell order with a limit of $82 can be executed right away. A Limit order can be partially or completely fulfilled.

 

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