BSE to Discontinue Stop Loss Orders  With Market Condition 

Published : 03 October 2023

By : Sachin Gupta

To avoid erroneous orders, BSE has decided to stop offering "Stop Loss with Market Condition" (SL-M) in the equities, equity derivatives, currency derivatives, and commodities derivatives divisions as of October 9, 2023.

What is Stop Loss with Market Condition?

A SL-M or Stop loss with market condition order is one that, when the trigger price is met, automatically sells or buys a security at the market price.

Reasons for the discontinuation

BSE made the decision to stop using SLM because it was causing deals to be made at exorbitant prices when there was little trading activity. Because the system accepts all bids to fill orders, even extremely high bids are approved because to SLM, which leads to unexpected price increases.

Is it a good decision?

According to various analysts, this is a constructive and forward-thinking move that will benefit all market players by enhancing the trading environment and market quality because SL-M can also result in severe price executions in low volume or during periods of rapid market price fluctuation.

How it will help traders?

With this action, traders will be protected, and BSE will be in line with NSE, which suspended SL-M orders in September 2021. SL-L orders can be used by traders in place of SL-M orders. These avoid transactions at odd or low volume prices by only buying or selling within a given price range.