What Does Do Not Increase Mean?
Do Not Increase (DNI) is an instruction on a good 'til canceled (GTC) buy-limit or stop order for a broker not to increase the number of shares bought or sold in the event of a stock split or stock dividend.
Understanding Do Not Increase (DNI)
Implicit in a trade order for an investor to buy or sell a certain number of shares is a total dollar amount or percent allocation in a portfolio. For example, suppose an investor would like to buy $20,000 worth of ABC stock. He places a GTC limit order to buy 400 shares at $50 per share. He also gives DNI instruction to the broker. The stock is trading at $55 per share at the time. Three months later, the buy order for 400 shares is still open, but ABC Company splits its stock 2 for 1, which means that the stock price will be cut in half when the split takes effect. For the investor with the open buy order, his original 400 shares will remain static; per the DNI instruction, the buy-limit order will not change to 800 shares at $25 per share (preserving the original $20,000 investment intent). The order then becomes 400 shares at $25 per share.
DNI can also apply in case of a stock dividend. Let's say XYZ Company declares a 20% stock dividend; in other words, for every 100 shares owned by investors, 20 additional shares will be given to them. Before this happens, however, an investor who wants XYZ shares submitted an order with her broker for 1,000 shares at $30 per share. This order size of $30,000 represents a targeted 5% of her portfolio. The stock dividend would increase the order size, absent a DNI instruction, to 1,200 shares. If the investor wishes to maintain the $30,000 allocation, she will order her broker not to increase the size to 1,200 shares.