Capita Share Dealing Services
Limit and Stop Loss Orders
What is a Limit order?
A Limit order is an instruction to sell shares at no lower than a particular price - known as the 'limit price'. It's valid for a pre-determined period, up to a maximum of 90 business days. Your shares will only be sold if the limit price is reached within that period. Please note that if the current selling price is already above your limit price the deal will go through immediately. Please also note that a Limit order is NOT a Stop Loss order.
We are required by the FSA regulation to publish your order to market participants. This is to increase market transparency. No personal details will be published and you have the right when you give your instructions to ask us not to publish details of the trade.
What is a Stop Loss order?
A Stop Loss order is an instruction, also valid for a pre-determined period, to sell a security if the price falls to a certain level.
When can I place a Limit or Stop Loss order?
You can place an order at any time online and between 8.00am and 4.30pm on the telephone. However any order you place will be executed only when the Stock market is open and the price limits you've set have been met.
When might I set a Limit order?
Limit orders can be used to place 'sell orders' in anticipation of a rise in the share price or at a level where you're happy to take a profit. Limit orders can be useful if you do not have time to constantly watch the price of a share but want to ensure you can take advantage of a price rise.
When might I set a Stop Loss order?
Stop Loss orders are placed where you anticipate that a share price may fall and you want to limit your losses.
Does it cost extra to place a Limit or Stop Loss order?
No.
How do I place a Limit order?
If you're dealing online, select the order type 'At Limit' and enter your chosen limit price and expiry date. You will then get the estimated deal value based on the limit price and the amount of shares you intend to sell and, if you are happy with this, select 'Place Limit Order'. You will then be asked if you would like to make this information available to market participants.
How do I place a Stop Loss order?
The procedure for setting a Stop Loss order is like that for placing a Limit order. The main difference is that you need to enter two prices to set the trigger and bottom values of the price band. You will then get the estimated deal value at trigger based on the Stop Loss trigger price and the amount of shares you intend to sell and, if you are happy with this, select 'Place Stop Loss Order'.
In what situations might my Limit order fail?
We do not guarantee that Limit orders will be executed even if the limit price is met. The order could fail as a result of:
- Market conditions at the time (such as a "fast market# where the market is so volatile that prices quoted by market makers are only indicative rather than guaranteed)
- Other clients having placed similar limit orders, and having an earlier time priority than your order (and so being executed in priority to your order)
- Other factors outside of our control. For example, the maximum size that can be traded online has changed since you placed the order.
In what situations might my Stop Loss order fail to execute?
Stop Loss orders will execute only if the price falls to the predetermined level. Price movements are not always precise, so when placing an order, you will be invited to set a band of between 1% and 10% below the Stop Loss trigger price. If the share falls to a level within the band, the order will execute. However, the order will not execute if the price drops through the band, which means that execution was not possible because no price within the band set was matched. We do not guarantee that Stop Loss orders will execute.
What happens if my Limit or Stop Loss order fails?
This depends on the reason for the failure. We will only notify you if the failure is for a technical reason, for example where the maximum online market size has changed to less than the quantity of your order. You will need to remember to check open Limit orders and Stop Loss orders frequently.
Please note that a Stop Loss order will fail to trigger a sale if no price within the band set is matched, even if the share price falls below the level specified. For example, a Stop Loss band set at a level of 42-41p (euros in Ireland) will not trigger a sale if the price falls from 43p to 40p. If a particularly narrow band is set, there is an increased chance of this happening. Please note that where a Stop Loss order fails to trigger a sale for this reason it will remain valid until it executes or expires.
How does the maximum market size affect Limit and Stop Loss orders?
Limit and Stop Loss orders cannot be placed for over the current online maximum size. This is the amount set by the Retail Service Providers (RSPs) and dictates what they are prepared to trade online. .
What happens when the Stop Loss price is met?
The Stop Loss order will execute when the market price matches your Stop Loss price. However, because sometimes we get an improved price from the market, the trade may execute at a better price than the Stop Loss trigger price. To control this, a tolerance level is incorporated in case the order attempts to execute at a price significantly above the Stop Loss range. The tolerance is pre defined as a percentage figure above the Stop Loss trigger price. This percentage can vary between 2% and 10%. The percentage is higher for low priced stocks than for those with high prices. .
Is there any protection from unrealistic early morning prices?
To protect against unrealistic early morning prices, we prevent Stop Loss orders from executing in the first 10 minutes of market trading. .
Markets can be volatile, particularly at the beginning of the trading day or for non-liquid stocks. We will prevent Stop Loss orders from executing if the best bid (the price you will get when you sell shares) and offer (the price you would pay if you wanted to buy shares) spread exceeds a certain percentage. This percentage varies depending on the unit price of the stock. The percentage is higher for low priced stocks than for those with high prices. We will endeavour to continue to monitor the order until it meets all trade execution criteria or until it expires.
We also endeavour to provide protection from extreme 'spike' prices by ensuring that a price persists for a minimum length of time or forms part of a trend before attempting to execute a Stop Loss order based on that price.
What special risks apply to Stop Loss orders?
Stop Loss orders are designed to trigger when the price of a security falls to a specified level. Please be aware that certain factors might cause the bid-offer spread (the difference between the buy and sell price) of a security to increase, even momentarily, to an unrealistically wide level, which would trigger your Stop Loss order. These unrealistic prices may nevertheless be the "best price# for that security at that time.
Can I delete or modify a Limit or Stop Loss order?
You can delete an order by entering the 'Account Details' screen and selecting the order you want to delete. You will then get a confirmation that this order has been deleted.
Please be aware that you cannot modify a Limit or Stop Loss order once it has been set. Instead, you will need to delete the open order as outlined above and place a new order at a new price.
What happens if a corporate action takes place?
Where a corporate action will affect the price of a stock we'll endeavour to delete your Stop Loss or Limit order as soon as we receive notification from CREST. You can then place a new order taking account of any adjustment in the share price.
Please note orders may be deleted following the payment of some dividends but this does not normally include interim and final dividend payments. Please remember to check open Limit and Stop Loss orders frequently.
What happens to Limit and Stop Loss orders if the system is offline?
If the system is not working, Limit and Stop Loss orders may be placed but they will not always be executed. For orders that already exist in the system, the order will be executed at the earliest opportunity if the criteria for the order are still within the limit when the system comes back online. If they are not within the limit, they will not be executed until they do match.
