How will NSE’s self-trade prevention mechanism affect Bracket Orders & Cover Orders?
NSE in 2015 introduced this mechanism to prevent self-trade for a client who has both buy and sell orders open for a certain scrip at the same price. The details of the mechanism are covered in this NSE document.
In case of BO/CO, the position will be left hanging with either no target or SL order, if a client places a counter order matching the BO/CO Stoploss or Target orders.
Example: 1. If you place a buy BO at 100 with SL at 98 and target at 104 and then place a sell BO 102 with SL at 104 and target at 98. In this case, your TGT & SL will be cancelled and the position will be left hanging.
2. If you place a Buy CO at market price(LTP is 100) with a stop loss of 99(Both of these orders get placed at the exchange simultaneously). Before the execution of the 1st leg if the scrip falls to 99, the SL order will get triggered.
Another scenario is when you place a buy BO limit order with the entry price above the current market price or place a sell BO limit order with the entry price below the current market price.
In such cases, if the market is volatile and the entry order is executed partially, the entry order for the pending quantity could try to match against your TGT or SL order placed simultaneously along with your entry order, and thus get cancelled.
Note: If your BO/CO is left hanging, you can either square it off by taking a counter order to your hanging position using NRML or you can call up our dealer desk at 080 40402020 and ask the RMS team to cover the position.