IEX Order Types

IEX offers six order types for continuous trading: Market, Limit, and four types of Pegs: Midpoint Peg, Discretionary Peg™ (D-Peg®), and Primary Peg, and Market Maker Peg. IEX also offers four order types to specifically participate in IEX Auctions: Market-On-Open, Limit-On-Open, Market-On-Close, and Limit-On-Close. IEX Auctions and the associated order types are described further in the IEX Opening and Closing Auction Quick Guide and IEX Auction Process Specification.

While protected by the IEX Speed Bump, IEX’s Market, Limit, Midpoint Peg, and Market Maker Peg order types behave in a similar way to those order types on other exchanges. However, IEX has added innovative predictive capabilities to D-Peg and Primary Peg that are designed to protect those orders from trading during unstable, potentially adverse conditions.

Detail about the IEX Signal (Crumbling Quote Signal), the predictive tool that IEX uses to detect price transitions and protect orders from trading at soon-to-be stale prices, as well as the behaviors of D-Peg and Primary Peg, are included below.

Order Types Summary

Display Eligible Reserve Eligible Minimum Quantity Eligible Limit Price Required Book Recheck Eligible Auction Eligible
Discretionary Peg No No Yes Optional Yes Closing Auction
Primary Peg No No Yes Optional No Closing Auction
Midpoint Peg No No Yes Optional Yes Closing Auction
Market Maker Peg Yes* No No Optional No Closing Auction
Limit Yes Yes Yes Yes Displayed orders: No
Non-displayed orders: Yes
All Auctions
Market No No Yes No, not accepted No Halt, Volatility, and IPO Auctions
Market-On-Open N/A N/A No No, not accepted No Opening Auction
Limit-On-Open N/A N/A No Yes No Opening Auction
Market-On-Close N/A N/A No No, not accepted No Closing Auction
Limit-On-Close N/A N/A No Yes No Closing Auction

*Required to be fully displayed

The IEX Signal

The IEX Signal uses a proprietary model, to indicate whether a given quote is unstable, meaning that the National Best Bid (NBB) is about to decline or the National Best Offer (NBO) is about to increase.

When the Signal indicates that the NBB (NBO) is about to decline (increase), the Signal is "on". During this time, D-Peg and Primary Peg buy (sell) orders on IEX do not exercise price discretion, and continue resting less aggressively, thus protecting these orders from trading in unstable, potentially adverse conditions.

For more detail on the formula and development process behind the IEX Signal, please read our white paper, "The Evolution of the Crumbling Quote Signal".

Discretionary Peg Order Type(Patent-Pending)

Discretionary Peg (D-Peg) is a non-displayed order type that is priced at either the National Best Bid (NBB for buys) or National Best Offer (NBO for sells). D-Peg orders passively rest on the IEX order book while seeking to access liquidity at a more aggressive price up to the Midpoint of the NBBO, except when IEX determines that the quote is "crumbling", or transitioning to a less aggressive price in a predictable fashion.

Functionality

D-Peg combines elements of Midpoint Peg with a traditional Primary Peg, as well as other traditional discretionary order types.

Discretionary Peg functionality

Information about slower, predictable changes in the NBBO are detected by the IEX Signal and provides D-Peg orders with an instruction to stop seeking liquidity at a more aggressive price until the quote returns to a stable state.

Examples

Scenario 1: Quote is Stable, IEX Signal is "Off"

D-Peg buy order booked on the NBB with a $10.13 limit. The NBBO is $10.10 x $10.14, during a period of quote stability.

  • Example 1: Sell order with a $10.09 limit crosses the spread and executes with the D-Peg order on the NBB at $10.10.
  • Example 2: Sell order with a $10.11 limit enters and the D-Peg order exercises $0.01 of price discretion to execute at $10.11.
  • Example 3: Midpoint sell order enters and the D-Peg order exercises $0.02 of price discretion to execute at the Midpoint.
  • Example 4: Sell order with a $10.13 limit enters and doesn’t trade with the D-Peg order, because D-Peg orders cannot execute at prices more aggressive than the Midpoint; no trade occurs.

Discretionary Peg example 1

Scenario 2: Quote is Crumbling, IEX Signal is "On"

D-Peg buy order booked on the NBB with a $10.13 limit. The NBBO is $10.10 x $10.14, during a period of quote instability (i.e., the quote is crumbling).

  • Example 1: Sell order with a $10.09 limit crosses the spread and executes with the D-Peg order on the NBB at $10.10.
  • Example 2: Sell order with a $10.11 limit enters, but D-Peg order does not exercise price discretion while the Signal is on; no trade occurs.
  • Example 3: Midpoint sell order enters, but the D-Peg order does not exercise price discretion while the Signal is on; no trade occurs.

Discretionary Peg example 2

Primary Peg Order Type

IEX’s Primary Peg is a non-displayed order type which extends the protections of D-Peg and the IEX Signal to trading at the NBB for buys and NBO for sells.

IEX Primary Peg orders rest on the order book 1 minimum price-variant (MPV, $0.01 for most stocks) lower than the NBB for buy orders and 1 MPV higher than the NBO for sell orders. They exercise discretion to trade at the NBB or NBO when the quote is stable, but stay booked 1 MPV away from the NBBO during a crumbling quote, as determined by the IEX Signal.

Examples

Scenario 1: Quote is Stable, IEX Signal is "Off"

Primary Peg buy order booked at 10.09, 1 MPV below the NBB. The NBBO is 10.10 x 10.14, during a period of quote stability.

  • Example 1: Sell ISO with a $10.09 limit crosses the spread and executes with the Primary Peg order at its resting price of $10.09.
  • Example 2: Sell order with a $10.10 limit crosses the spread and the Primary Peg order exercises price discretion to execute on the NBB at $10.10.
  • Example 3: Sell order with a $10.11 limit enters but doesn’t trade with the Primary Peg order, because Primary Peg orders cannot execute at prices more aggressive than the NBB for buy orders (or NBO for sell orders); no trade occurs.

Pimrary Peg example 1

Scenario 2: Quote is Crumbling, IEX Signal is "On"

Primary Peg buy order booked at 10.09, 1 MPV below the NBB. The NBBO is 10.10 x 10.14, during a period of quote instability (i.e., the quote is crumbling).

  • Example 1: Sell ISO with a $10.09 limit crosses the spread and executes with the Primary Peg order at its resting price of $10.09.
  • Example 2: Sell order with a $10.10 limit crosses the spread, but the Primary Peg order does not exercise price discretion while the Signal is on; no trade occurs.
  • Example 3: Sell order with a $10.11 limit enters but doesn’t trade with the Primary Peg order, because Primary Peg orders cannot execute at prices more aggressive than the NBB for buy orders (or NBO for sell orders); no trade occurs.

Pimrary Peg example 2

Midpoint Peg Order Type

Midpoint Peg is a non-displayed order type that is priced at the Midpoint of the NBBO, subject to the order’s limit price, if any. These orders do not change their behavior during periods of quote instability, and when D-Peg orders exercise price discretion to the Midpoint of the NBBO, Midpoint Peg orders have priority over D-Peg orders.

Market Maker Peg Order Type

To support Market Makers with their quoting obligations for registered securities, IEX has created a Market Maker Peg order type. This order type essentially functions as a displayed Peg order that will allow for quoting at an offset to a defined Reference Price identified by the Exchange. As described in the Market Maker Specification, a Market Maker Peg order is repriced by the System when the Reference Price has moved a defined percentage away or towards the order. A Market Maker Peg order will continue to be repriced by the System until it reaches the Member-defined limit, if any, or an impermissible price (e.g., priced at $0.00), at which time such order will be canceled back to the Member. If a Market Maker Peg order is decremented to less than one round lot, the order will also be canceled back to the Member.

Limit Order Type

An order to buy or sell a stated amount of a security at a specified price or better.  A marketable limit order is a limit order to buy (sell) at or above (below) the lowest (highest) Protected Offer (Bid) for the security.  IEX accepts displayed, non-displayed, or reserve limit orders.  Additionally, limit orders may be designated as routable.  Finally, limit orders may be an ISO.

Market Order Type

An order to buy or sell a stated amount of a security that is to be executed at or better than the NBBO at the time the order reaches IEX.  Market orders are never displayable.  Market orders do not trade through Protected Quotations, therefore any unexecuted portion of a market order will be canceled if all liquidity on the Exchange at or better than the best priced Protected Quotation is exhausted.  IEX accepts market orders designated as routable.  Any portion of a routable market order that cannot be executed on the Exchange at or better than the best priced Protected Quotation will be eligible for routing to away trading centers.  A routable market order will trade at increasingly aggressive prices, fully satisfying all Protected Quotations, until the order is fully filled, reaches the LULD Price Band, or reaches the IEX Router Constraint.

Please see the IEX Rulebook for a complete description of all order types.