What is the defining feature of a Fill or Kill order?

What is the defining feature of a Fill or Kill order?

• A. It cancels any unfulfilled portion instantly
• B. It allows partial fulfillment and continues to remain open
• C. It remains valid until the next trading day
• D. It specifies a minimum price for execution

Answer: (A)

A Fill or Kill order is defined by its requirement for execution. This type of order instructs brokers to either fill the entire order immediately or to cancel it altogether with no partial fulfillment allowed. As soon as the order is placed, it is expected to be executed fully without delay, and if any portion of the order cannot be executed immediately, the entire order is canceled.

This direct and immediate requirement differentiates a Fill or Kill order from others. Options that suggest partial fulfillment or open validity until the next trading day do not align with the strict all-or-nothing nature of a Fill or Kill order. Similarly, an order that specifies a minimum price for execution refers to a different type of order known as a limit order, which also does not capture the essence of Fill or Kill.

Overall, the defining feature rests on the immediate and complete execution requirement, leaving no room for partial completions or delays.