What is a Fill or Kill Order (FKO)?
A fill or kill order (FKO) is an order to purchase or sell a large quantity of stock that has to be executed immediately, usually within just a few seconds, or the order will be ‘killed’ off.
In other words, the brokerage is instructed to buy/sell everything at once, super fast, and if that is not possible, sell/buy nothing at all.
The purpose of a fill or kill order is to ensure that an exchange is put through at a specific price and reduce the time it takes to complete a large order.
A fill or kill order is treated the same as an IOC (immediate or cancel) or AON (all or none) order.
According to ft.com/lexicon, a fill or kill order is: “An order to buy or sell a stock that is cancelled unless it is executed immediately.”
When are fill or kill orders used?
Fill or kill orders are typically used in scenarios where the order for a particular stock is for a very large quantity and is treated as a market limit order that needs immediate attention.
These types of orders are also employed when there are different unlinked markets open for the same asset. In this case a fill or kill order allows a trader to fill out each order sequentially – without having to manually cancel it if it is not fulfilled. Essentially this means that no partial execution of the order is allowed.
On some exchanges, a fill or kill order is a market or limit order that is executed by filling the number of shares that are made available by the first bid or offer, and then canceling any unfilled balance.