Immediate or Cancel
Also written IOC · Immediate or Cancel (IOC) · IOC order
A time condition on an order: whatever can be matched the moment it reaches the market is executed, and any unmatched balance is cancelled immediately rather than waiting in the order book.
In plain language
Most orders, once placed, sit in the exchange's order book until they are matched or the day ends. An Immediate or Cancel (IOC) order refuses to wait.
When an IOC order reaches the market, the system looks for matching orders on the other side at that instant. Whatever quantity can be matched is traded. Whatever cannot is cancelled straight away. The order never becomes a resting order that others can see or trade against later.
That makes IOC useful when you want liquidity now and do not want to leave a visible order behind - and it is the only kind of order a broker in risk reduction mode is allowed to place.
How it works
Chapter 3 (section 3.2.2.1, Types of order) groups order conditions into time, price and quantity conditions. Among time conditions:
| Condition | Meaning |
|---|---|
| DAY | Valid for the day entered; unmatched balance cancelled automatically at end of trading day |
| IOC | Executed as soon as released into the market, failing which it is removed; partial match is possible and the unmatched portion is cancelled immediately |
| GTC | Stays until cancelled by the trading member |
| GTD | Stays until a specified day/date |
| Cancel on Logout (COL) | All outstanding orders of the user cancelled when the user logs out of the TWS |
The workbook notes that GTC and GTD orders are currently not available on the system as per SEBI directives.
Matching price. An incoming order is matched against resting orders on price-time priority, and a trade takes place at the passive (resting) order's price.
Risk reduction mode. When a stock broker breaches 90% collateral utilisation, only orders with the IOC attribute are permitted (Chapter 4, section 4.1.1.8), and all unexecuted orders are cancelled.
A worked example
This is the workbook's Example 3.3. An order is placed to buy 200 shares of ABC Industries at Rs 807.60, Immediate or Cancel. The order book shows:
| Buy qty | Buy price (Rs) | Sell price (Rs) | Sell qty |
|---|---|---|---|
| 1,606 | 807.55 | 807.60 | 100 |
| 13 | 807.50 | 807.75 | 119 |
| 383 | 807.45 | 807.80 | 184 |
- The only sell quantity at or below Rs 807.60 is 100 shares at Rs 807.60.
- 100 shares trade at Rs 807.60 - the passive sell order's price. Value: 100 x Rs 807.60 = Rs 80,760.
- The remaining 100 shares are cancelled immediately, because nothing else is offered at Rs 807.60 or better.
Compare the workbook's Example 3.2: the same buy of 200 shares at Rs 807.60 as an ordinary limit order. There too 100 shares trade at Rs 807.60, but the unfilled 100 shares stay in the book as the new best buy order at Rs 807.60. The only difference is the IOC condition.
Why NISM asks about it
Chapter 3 (Introduction to Securities Broking Operations, section 3.2.2.1 on types of order) defines IOC with Example 3.3, alongside DAY, GTC, GTD, COL, disclosed quantity and minimum fill. Chapter 4 (section 4.1.1.8) makes IOC the only order type allowed in risk reduction mode. Chapter 3 carries the largest weightage in the paper (20%), and order-condition classification - is IOC a time, price or quantity condition? - is a standard question.
Common exam traps
- IOC is a time condition, not a price or quantity condition.
- Partial execution is allowed. IOC is not "all or nothing"; only the unmatched balance is cancelled.
- The trade happens at the passive order's price, which can be better than the IOC order's limit.
- Only IOC orders are allowed in risk reduction mode - a favourite cross-chapter question.
- GTC and GTD are currently not available as per SEBI directives, even though the workbook defines them.
- Do not confuse IOC with Cancel on Logout. COL cancels outstanding orders when the user logs out; IOC never leaves an outstanding order.
Where this is taught
- Series XVI · Chapter 6: Trading Mechanismintroduced here
- Series VII · Chapter 3: Introduction to Securities Broking Operationsintroduced here
Related terms
- Disclosed QuantityAn order condition that shows the market only part of the total quantity — once that visible slice trades, the next slice is automatically released, repeating until the whole order is filled.
- Risk reduction modeThe restricted state a stock broker is put into when 90% of its collateral is used up by margins: pending orders are cancelled, only IOC and margin-checked orders pass, until utilisation falls below 85%.
- Stop loss orderAn order that stays out of the market until the price reaches a trigger price, then enters as a limit or market order - used to cap the loss on an open position.
- Order bookThe live electronic list of unmatched buy and sell orders for a contract, arranged by price level, showing quantity and number of orders at each price — generally up to five price levels a side.
- Day orderAn order valid only for the single trading day on which it is entered — if not executed by the end of the day, the trading system automatically cancels it.
- Limit orderAn order to buy or sell a contract at a specified price or better — lower for a buy, higher for a sell — which waits in the order book if it cannot be matched at once.
- Market order with protectionA combination of a market order and a limit order that lets a market order execute only up to a price level specified by the trader, so it cannot be filled at any price.
- Trader WorkstationThe terminal through which a trading member logs in to the exchange's trading system to enter orders and view its own orders, trades and market information.