Directed Order

DEFINITION of 'Directed Order'

A customer order to buy or sell securities, wherein the customer gives specific instructions to the broker or dealer for the order to be routed to a particular exchange or venue for execution. A directed order is so named because the client directs the order routing for execution. The client preference for a particular exchange for execution may be based on the view that incrementally better execution prices are available there for trading a particular stock or security. This is a factor that is of significantly greater importance to the active trader than it is to the average retail investor.

BREAKING DOWN 'Directed Order'

In contrast to directed orders, non-directed orders are those where the client does not specify a particular venue for order execution. The choice of exchange or venue for order execution in this case is left up to the broker or dealer. In an effort to facilitate transparency and prevent wrongdoing with regard to routing of non-directed orders, the SEC adopted Rule 11Ac1-6 in November 2000, requiring all broker-dealers to furnish quarterly reports that disclose their order routing practices. Rule 11Ac1-6 was subsequently replaced by Rule 606.

RELATED TERMS
  1. Order

    An investor's instructions to a broker or brokerage firm to purchase ...
  2. Executing Broker

    The broker or dealer that finalizes and processes an order on ...
  3. Matching Orders

    The process for executing securities trades by pairing buy orders ...
  4. Non-Directed Order

    A directive by a seller to a broker instructing the latter to ...
  5. Market Order

    An order that an investor makes through a broker or brokerage ...
  6. Limit Order

    An order placed with a brokerage to buy or sell a set number ...
Related Articles
  1. Investing

    Is The Series 24 Exam Hard?

    What makes the series 24 so challenging? The exam focuses very heavily on the supervision of trading and market making and the supervision of investment banking.
  2. Markets

    Understanding Order Execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  3. Trading

    How To Start Trading: Order Types

    The types of orders you use can have a large effect on your trading performance, so understanding the different order types is important to your success.
  4. Markets

    Explaining Market Orders

    A market order is the most common order used to purchase a financial security.
  5. Trading

    The Basics Of Trading A Stock

    Taking control of your portfolio means knowing what orders to use when buying or selling stocks.
  6. Investing

    Understanding Immediate-or-Cancel Orders

    A trader places an immediate-or-cancel order to immediately execute a trade in full or in part. Any part of the order that remains unfulfilled is canceled.
  7. Trading

    Which Order To Use? Stop-Loss Or Stop-Limit Orders

    Stop-loss and stop-limit orders can provide different types of protection for investors seeking to lock in profits or limit losses. Investors need to know how each type of order works to know ...
  8. Trading

    How To Place Orders With A Forex Broker

    Learn how to set each type of stop and limit when trading currencies.
  9. Investing

    NYIF Instructor Series: "Fill or Kill" Order

    In this short instructional video Anton Theunissen explains what the "fill or kill" order is.
  10. Trading

    Making The Trade: Understand Order Types

    Buying and selling stock can be a lot like buying or selling a car. Traders should use and understand tools such as market orders, limit orders, day orders, and good-'til-canceled orders to ensure ...
RELATED FAQS
  1. What's the difference between a market order and a limit order?

    Buy and sell trades with market orders at the present stock price and execute limit orders if the stock price falls within ... Read Answer >>
  2. Is it actually possible that my trades consistently get executed higher than the ...

    Can one of the best brokerage names fail to execute trades on market orders consistently at higher (buy o... Read Answer >>
  3. What is the difference between a stop and a market order?

    Learn about market orders and stop orders, how they are used and executed, and the main difference between stop orders and ... Read Answer >>
  4. What are the regulations surrounding limit order protection?

    Learn about the order protection rule enacted by the Securities and Exchange Commission (SEC) to ensure investors receive ... Read Answer >>
  5. How do I place a limit order online?

    Learn how a limit order is placed, the types of stocks it is most useful for and the specifications placed with it to suit ... Read Answer >>
  6. Why do limit orders cost more than market orders?

    Learn the difference between a market order and a limit order, and why a trader placing a limit order pays higher fees than ... Read Answer >>
Hot Definitions
  1. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  2. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  3. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  4. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  5. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  6. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
Trading Center