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Order rejection

A venue or broker refusing an order outright, so it never becomes live. Common causes are risk limits, bad prices, insufficient buying power and instrument restrictions.

A reject is not a fill at a bad price; it is no order at all. That sounds benign until you realise the trade you were counting on does not exist while you assume it does.

Typical triggers: price outside the venue's price bands, size above a maximum order quantity, locate-requirement not satisfied on a short sale, insufficient buying-power, a pre-trade-risk-check breach, or a symbol that is halted or restricted.

Example: you try to short 1,000 shares of a hard-to-borrow name and receive a reject for no locate. You believe you are short and hedged; you are flat. The stock falls 6% and you make nothing, or worse, your long leg of a pair trade keeps running without its hedge.

Related: pre-trade-risk-check, locate-requirement, buying-power, execution-report

Educational only, not advice. Spotted an error? Post in Site Feedback.