Order Driven Execution

 

In order to offer better solutions to Investors, whenever possible, trying to adjust to market structural changes in particular regarding risk and liquidity, DIF Broker introduced in November 2016 a new process of order execution designated - Order Driven Execution (ODE). This model is applied to Forex and CFD market, and allow Clients greater control and transparency of their orders.

DIF Broker is changing from the Quote Driven Model for the new Order Driven Execution Model due to a number of reasons:

  1. Regulatory Requirements
    • Early adopter of the FX Global Code and new best execution guidelines under MIFID II.
    • Processing changes mandated by FSA after SNB event.
  2. Improved Risk Management
    • Removing the promise of firm liquidity at a guaranteed price i.e. Liquidity Mirage.
  3. Opportunity for DIF Broker to Differentiate Ourselves in the Industry
    • By becoming more transparent in the way that we handle Client orders, thus enhancing our best execution practices.
    • Early adoption of regulatory requirements (MIFID II Best Execution Policy) and the forthcoming release of the FX Global Code are the key drivers in defining ourselves as the most transparent and responsible FX and CFD Trading Provider.
  4. Functional Enhancements
    • Price Tolerance – greater control over the way that a Client order is traded (Control).
    • Price Improvements will be passed back to the Client (Transparency).
    • Partial fills through both IOC (Immediate-or-Cancel) and Resting Orders (Access).
    • Extend the breadth of liquidity available to Clients.

 

Types of Orders

Quick Trade Orders

Quick Trade Orders can be,

Limit IOC (Immediate-or-Cancel): Can be used for FX Spot and CFD. An instruction to fill as much of an order as possible within pre-defined tolerances of a limit price, immediately (5 second Time-to-Live). Unlike Market IOC orders (please see below), Limit IOC orders allow a Client to control the maximum slippage that they are willing to accept specified in pips or percentage terms. Default tolerance is set to 0,01% for all currency pairs, but is configurable on an individual currency pair level. The tolerance specified by the Client is remembered by the platform.

Market IOC (Immediate-or-Cancel): Can be used for FX Spot, not for CFD. CFD will have a Market order with Day duration available within Quick Trade. A Market IOC order is an instruction to fill as much of an order as possible, immediately. Immediately means the order is placed with a 5 second Time-to-Live (TTL), although the speed of execution is not expected to change from what it is currently. This can result in partial fills. Under normal market conditions a Market IOC order will be filled in full immediately. In the event that it isn’t, any residual amount will be cancelled. Price Tolerance cannot be added on a Market IOC order, meaning that a client cannot control slippage.

 

Resting Orders

Resting Orders can be used for FX Spot and CFD and they can be,

Market: With Day duration, this order is used to get into the market quickly and will continue working until the full amount is done.

Limit: With variable duration (Day, Good-Til-Cancelled etc), this order rests at the system until triggered, cancelled or expired. Depending on the availability of liquidity, the order can be filled partially or in full. If the order cannot be filled in full, the residual amount will continue to rest in the order book, until the price is triggered again.

Stop: With variable duration (Day, Good-Til-Cancelled etc), this order rests at the system until triggered, cancelled or expired. A stop order acts as a Market order when triggered. It will continue working until the full amount is done. Any residual amount cannot be cancelled.

Stop Limit: With variable duration (Day, Good Til-Cancelled etc), this order rests at the system until triggered, cancelled or expired. Once the price touches the specified Stop level, the Spot Limit order is converted into a Limit order at the Stop price. It is then treated as a Resting order, with duration at the original Stop Limit order.

 

Trade Ticket and Execution Style

Sell/Buy Prices

Click Buy or Sell to place a Limit Order with a pre-defined Price Tolerance.

Adding Price Tolerance ensures that your order is only executed within a range that you are comfortable accepting (see Edit Price Tolerance).

The minimum price (when selling) and maximum price (when buying) are displayed on the Trade Ticket below the Spot Price i.e. “Limit @x.xxxx”

Type

Select the order type that you wish to use to enter a position:

Quick Trade orders for immediate execution, with or without a pre-defined Price Tolerance.

Resting Limit, Market and Stop orders for longer durations i.e. Day Order, Good Til Cancelled etc.

Edit Price Tolerance

Allows you to remove the option of adding Price Tolerance. This changes the Quick Trade order from a Limit Order to a Market Order.

 

Edit Price Tolerance

Price Tolerance enables you to define the minimum price (when selling) or maximum price (when buying) that you are comfortable accepting (i.e. a Limit Order) when entering a position.

Price Tolerance can be specified in pip (i.e. 0,1 pips) or percentage terms (i.e. 0,01%).

The default is set to 0,01% of the Spot Price for all currency pairs, but is configurable on an individual currency pair level.

Pips

Define your tolerance in pip terms, in increments of 0,1 pip (1/10th of a pip).

Percent

Define your tolerance in percentage terms, in increments of 0,01% (1/100th of 1% or 1 basis point).

 

 

 

 

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