Why are intraday (MIS/CO) orders not allowed for some stocks?

Intraday orders on these stocks are often restricted because of the increased risk associated with them. As we discussed, these scrips are considered high-risk due to factors like volatility, price manipulation, and trading anomalies. Allowing intraday orders on these scrips can amplify the risk even further. It can lead to increased volatility and greater potential for manipulation. Additionally, it can also increase the chances of erroneous or fraudulent trades, which can create instability in the market. By restricting intraday orders on these scrips, exchanges and regulators are trying to protect investors and maintain market stability.

MIS and CO are the two intraday order types that Tiqs presently offers. These orders come with a higher risk since they allow you to trade with money that is more than what is in your account (leverage). A stockbroker may be forced to restrict intraday orders for particular equities due to regulatory or risk management considerations. You will only be able to place delivery (CNC) orders for such stocks. If there is a significant chance of being unable to exit the intraday position, intraday orders may be blocked, which in some circumstances may lead to a short delivery.

Some of the causes for blocking intraday orders are listed below:

1. If markets are volatile (or if there is a quick shift), some intraday (MIS/CO) order types may be disallowed. This prevents clients from losing more money than they have in their accounts, which would put the broker at a substantial credit risk.
   

2. Small circuit limit range has insufficient liquidity or volume (because volatility is often high) on IPO listing day.
   

3. The stock has a high minimum required margin, and intraday trading may incur a margin charge.
   

4. The stock falls under a regulatory classification that forbids intraday trading on Trade-to-Trade, ASM, GSM, or Unsolicited SMS category stocks.
   

 

Click here to know more about ASM & the shares blocked for the day due to ASM.

Click here to know more about GSM & the shares blocked for the day due to GSM.