The Bourse de Montréal Inc. (MX) is proposing to bring back the market order.
In a notice to the industry, the exchange is proposing to introduce a new order type — a market order that can be filled at multiple price levels until the entire order is filled.
Currently, market orders on the MX only execute against the quantity available at the best price, and any unfilled portion becomes treated as a limit order at the original price.
“The new market order behaviour envisioned by the bourse would allow the order to match and trade at multiple price levels (ticks) until completely filled provided that there is sufficient liquidity in the book or until it reaches an outer market order protection band,” the exchange said in its notice seeking comment.
According to the notice, the MX used to offer this type of order back in the days before the exchanges demutualized, when both equities and equity options were traded on the trading floor. However, this order type was eliminated in 2001 because the electronic trading platform that was adopted at the time didn’t support this kind of multi-price trading.
Yet, other electronic trading floors around the world have offered multi-price market orders, it noted.
The proposal to reintroduce market orders at the MX is now out for comment until Dec. 9.
“The goal of this change is to implement an order type that increases the possibility to interact with more layers of the book when entering an order, thereby reducing the probability of having to amend the price of an order for the purpose of obtaining an execution,” the notice said, adding that this will make it easier to fill orders in “time sensitive situations.”
The exchange aims to introduce the new order functionality in the first quarter of 2023.