Automatic order routing
Automatic order routing allows the system to send the transaction instructions (orders) entered by clients and any modifications/cancellations of such instructions directly to the execution venue, where the orders are also automatically matched. This means that the orders reach the execution venue in seconds.
The additional option ‘Allow automatic order processing’ is displayed in the order preview when a purchase or sales order for Baltic shares is entered. If this option has been selected, the order will be automatically sent to the execution venue. If the option has not been selected, the order will be sent to LHV broker – the broker will check the order and enter it in the stock exchange system manually. Automatic routing of orders has been set as the default option. In case of automatic routing of orders, LHV broker does not check the content of the orders, modifications or cancellations.
In case of foreign security orders the order is automatically sent to execution venue.
For transmitting market price orders to execution venue and for reserving the funds in case of buy orders the current bid/ask price is used. To execute the order on Baltic markets, 10% more funds are reserved and the largest possible amount will be executed at the best possible price. The remaining part of the order will be cancelled regardless of the fact that it would have been possible to continue the execution with a less favourable price. LHV does not recommend the use of market price orders on Baltic markets due to a high risk of market price fluctuations.
The result of automatically routed order on Baltic markets, e.g. ‘Order insert request sent to the market (buy, qty = 100, price = 15.50, valid 20060524)’ is displayed on the order confirmation sheet. The relevant error message will be displayed if sending the order to execution venue failed. The reason of the failure may be that the limit price of the order remains outside the reference price limit, but in exceptional cases also that connection to the stock exchange system is lost. If the limit price of the order remains outside the reference price limit or if there is no trading at the stock exchange (the stock exchange is closed), the order will be left pending in the LHV system. The system attempts to send such orders automatically to the stock exchange at the beginning of every trading day during validity period of the order. If sending the order to the Baltic stock exchange failed due to technical problems (such as lost connection), the LHV system will attempt to automatically resend the order every 3 minutes.
If sending the order to the foreign execution venue failed due to technical problems, the LHV system will not automatically resend the order.
The execution procedure of automatically routed Baltic orders can be observed in real time under PENDING ORDERS section in the LHV internet bank– the ORDER AUDIT TRAIL page will open when you click on the order status ‘In progress’. This page shows the exact time log of when the order was sent, when it was received at the execution venue, when a modification request was sent and executed, when a cancellation request was sent and executed, when the order was executed or the transaction was carried out, and any other possible actions associated with the order. If the order is currently active on the execution venue, the ‘Show order in market order book’ link on the audit trail page shows the exact status of the order in the stock exchange order book – the selected order is highlighted in red and the other orders of the client are in yellow. The link to the audit trail page of the order is also shown in the emails about the entry, modification, and cancellation of the order.
Orders will be cancelled by LHV if an important corporate action takes place on the underlying stock.
Order modification and cancellation requests can be sent under section PENDING ORDERS in the LHV internet bank. In case of automatically routed orders, such requests are automatically sent to the execution venue and modification/cancellation occurs in seconds without the interference from LHV broker. Modification and cancellation requests sent outside the trading day will remain pending and they will be automatically sent to the execution venue at the beginning of the next trading day.
When orders are matched at the execution venue, the relevant purchase or sales transaction is automatically carried out in the LHV system and if the order was partially matched, the quantity of the unmatched order will also be reduced respectively. When the order is matched in full or the last part of the transaction is carried out, the quantity of the initial order is changed to zero and the order is cancelled.
LHV may at all times stop the automatic order routing for all orders by informing the client via LHV website.
