DEFINITION of 'Off-Floor Order'

Off-floor order is an investor's directive to buy or sell securities through a broker's electronic system, not through a broker on the floor of an exchange. Exchange rules require off-floor orders, which are made on behalf of customers, to be executed before on-floor orders, which are made for exchange members' own accounts. 

BREAKING DOWN 'Off-Floor Order'

The speed and cost-efficiency of electronic trading systems have dwindled the number of floor brokers. Floor brokers can be essential in certain cases (e.g., helping to restore trading order in wildly volatile markets), but the vast majority of trading today takes place off the floor and through automated exchanges. The reach and sophistication of electronic exchanges make it near certain that an investor's order can be filled at or very close to the desired price. Whereas before when the intervention of a floor broker could be necessary to fill an order, trades are generally executed off-floor.

The Need to Go Off-Floor to On-Floor

Floor brokers still exist, though, and they can be useful when large, complex trades must be executed. Plain vanilla trading of liquid stocks are typically executed off-floor, but complicated derivatives trades may require the assistance of a floor broker. A particularly large trading order of relatively illiquid securities could also be handled by a floor broker, who may be in a good position to process the order smoothly on behalf of the client. Market insights and a "feel" to trading can also be provided by human beings on the floor. This is not usually possible through trading screens, and a client that may otherwise submit an order off-floor could find it necessary to go on-floor for best execution.

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