DEFINITION of Non-Client Order

A non-client order is an order on an exchange made by a participant firm or on behalf of itself or on behalf of a partner, officer, director, or employee of the participant firm. Where a participant firm is a firm that is entitled to trade on the exchange, it also known as a member firm. Most securities exchanges restrict a participant firm and its employees from trading in the same securities as a client of the participant. The restriction is designed  to minimize the conflict of interest - perceived or actual - that may occur when a participant or its employee compete with the firm’s clients for the execution of orders.

A non-client order is carried out for the benefit of a brokerage firm or investment company, rather on behalf of one of its clients. While these orders are allowed, priority must be given to client orders for the same securities. So, if a client submits an order to a broker to buy 1,000 shares of XYZ stock, and the firm also wants to buy 1,000 shares of the same company, then the broker must first execute all of the client's order before starting to fill its own order. Not only that, but the client should be entitled to the more favorable prices given executions at multiple price levels that fill both the client and participant firm.

A non-client order is also known as a "professional order," and a client order may also be known as a "customer order".

BREAKING DOWN Non-Client Order

When orders to trade securities make their way down to an exchange (either a physical or electronic exchange), the order must be marked with the kind of client designation who benefits from the trade. Since a broker acts as agent for their customers, client orders are given priority and must be executed in full before the firm can begin trading the same security for its own account. When a firm does trade for itself, it is a non-client order and such order tickets will be marked "N-C", "N", or "Emp" depending on the exchange indicating that the orders are non-client orders.

When a broker acts as principal - that is, the broker directly buys or sells to their client taking the other side of their trade, then the trade must also be marked accordingly. Order priority for client over non-client order flow is essential to prevent front running (trading ahead) and other principal-agent problems that can arise in securities markets.