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What is a Designated Order Turnaround?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 09 October 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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The Designated Order Turnaround is an efficient programmable system that makes it possible to route investment orders for specified options directly to a specialist located on the floor of the exchange. Doing so allows the order to bypass the usual practice of going through a broker before the order is executed by the exchange. Known around the New York Stock Exchange as the DOT, the Designated Order Turnaround effectively speeds up the placement of orders in an environment that is often extremely time sensitive.

The process of utilizing a Designated Order Turnaround involves the use of computer technology to relay the order. Making use of a network interface, it is possible for investors to submit orders that are immediately logged in the servers for the exchange. The orders can be executed and confirmation of the execution relayed to the investor in real time.

Along with investors, it is also possible for stock exchange agencies to make use of the Designated Order Turnaround system. The agency can receive an order by phone from a client and enter the order while still talking with the customer. Because the process of entering and executing the order is so efficient, it is possible for the agent to confirm with the client that the order is submitted and executed before the phone call is ended.

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The obvious advantage of this approach is that the potential for delay is virtually eliminated. This means that investors can buy or sell before there is much chance of a price change on the unit price of any security that is listed with DOT. This type of real-time investment capability has made it possible for investors to reap huge benefits by having an order executed now rather than ten minutes or an hour later. Investors who focus on NYSE and other major stock exchange activity can appreciate the potential of this accelerated means of placing orders.

At the same time, this quick processing that is made possible by the Designated Order Turnaround places additional responsibility on the investor to be very sure that the order is really what he or she wishes to do. There is not a window of opportunity to call back a broker and possibly prevent the order from being executed. For this reason, any investor making use of the DOT should be very sure that the order is a good move.

A Designated Order Turnaround cannot be used with every investment option. The process is limited to securities that are listed with the DOT, and can handle such transactions as limit orders, basket trades and several other types of market orders.

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