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Why are my CNC orders getting rejected, stating that limit orders that are far away from the LTP are restricted?

The price discovery process or mechanism is an activity where stock prices are determined by the demand and supply of stock by the interaction between the buyers and sellers via orders placed.

It has been observed that few traders are placing orders which are in no way related to the current market price of a security, or orders are placed with prices that are far away from the last traded price, theoretical price, or reference price. Trades placed at such unrealistic prices may lead to instability in the price discovery process.

To curb this issue, the exchange has released this circular which states that the brokers should bring in a mechanism to restrict trades placed at abnormal/irregular prices.

We at Zerodha are blocking CNC trades that are 5% away from the last traded price (LTP) based on our own interpretation of the circular.

You will get the rejections on CNC orders both regular and AMO, if the order price is 5% away from the LTP. If you intend to place the order 5% away from the LTP, you can create a GTT order or place a normal CNC order within the range; the range amount is displayed in the rejection message.

In CNC buy orders:

In CNC sell orders:


The rejection is only applicable for CNC limit orders and not for MIS/CO orders until further notice.