What does "Immediate or Cancel" Mean?

Malcolm Tatum

Also known as an accept order, an immediate or cancel order is an order that calls for the immediate execution of at least a portion of any order once it has been introduced into the marketplace. When the entire order is not slated for immediate execution, the portions that are not executed are canceled as part of the process. An order of this type is often used when large quantities of several items are ordered by a single client and there is some concern that not all items and quantities can be honored within the amount of time required by the customer.

Man climbing a rope
Man climbing a rope

With an immediate or cancel approach, the chances of receiving at least a portion of the order within the time frame required is very good. At the same time, the automatic cancellation of any portions of the order that cannot be filled allow the customer to seek those goods from other vendors, without the need to issue a manual cancellation for those particular goods. This is different from what is known as an all or none order or a fill or kill order, since those approaches call for the vendor to either fill the entire order, or reject the order completely; no partial fulfillment is allowed and the client must seek to secure all the goods elsewhere.

In terms of investing, an immediate or cancel order refers to the purchase of several different securities in varying quantities. The arrangement empowers the broker to identify which portions of the order can be executed immediately and to make those purchases immediately. Rather than attempting to comply with the rest of the order at a later date, the broker informs the investor that certain securities within the order are not available at the present time and the remainder of the order is killed or canceled. This frees the investor to execute a new order for those securities at a later date, if desired, without having to keep track of what may already be pending in an older order that was only partially filled.

The immediate or cancel approach is commonly employed in both investing strategies and in the order of goods provided by vendors to their customers. At times, this strategy may be a better option than other approaches that either call for completely abandoning an order that cannot be filled in its entirety, or one that remains open ended, allowing the vendor to incrementally fill the order until it is completed. Considered a clean, quick, and easy way to acquire securities or goods, the immediate or cancel approach can save time and money, and prevent a great deal of frustration for the buyer.

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