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

Intraday (MIS/CO) orders are not allowed for some stocks due to regulatory or risk management reasons. These types of orders provide leverage, allowing traders to trade with more funds than they have in their Zerodha account. However, stockbrokers may restrict intraday orders for certain stocks to mitigate potential risks. In such cases, traders can only place delivery (CNC) orders for those particular stocks. To learn more about product types, see What does CNC, MIS and NRML mean?

Intraday orders may be blocked due to the high risk of being unable to exit the intraday position, which can potentially lead to short delivery in certain situations. To learn more about short delivery, see What is short delivery and what are its consequences? There are several reasons why intraday orders can be blocked, including:

  1. Volatile markets or sudden movements: During periods of high volatility, specific intraday order types (MIS/CO) may be blocked to prevent clients from incurring losses beyond their available account funds and to mitigate credit risk for the broker.
  2. Low liquidity or volume: If a stock has low liquidity or trading volume, intraday orders may be blocked to ensure that there is sufficient market depth for smooth order execution.
  3. Small circuit limit range: Intraday orders can be blocked for stocks with a small circuit limit range to avoid excessive price fluctuations and potential market manipulation. To learn more about circuit limits, see What are circuit limits or price bands?
  4. IPO listing day: On the day of an initial public offering (IPO) listing, when market volatility is typically high, intraday orders may be blocked to manage risk and protect investors.
  5. High margin requirement and potential margin penalty: Stocks with high margin requirements may have intraday trading blocked to avoid margin penalties that may be incurred due to inadequate margin coverage. To learn more about margin penalty, see What is a margin penalty, and why is it charged?
  6. Regulatory restrictions: Stocks categorized as Trade-to-Trade (WEB), ASM (Additional Surveillance Measures) (WEB), GSM (Graded Surveillance Measures) (WEB), or Unsolicited SMS category are blocked from intraday trading due to regulatory restrictions.

Intraday orders can be blocked for any instrument based on Zerodha's policy.