What Is a Fill-or-Kill Order?

A “fill-or-kill” (FOK) order is a type of buy or sell trade that instructs a broker to execute the trade immediately and completely, or else the entire order is canceled. The purpose of a fill-or-kill order is to ensure that the transaction goes through immediately to the full extent of the order quantity at prevailing prices. A FOK order does not allow partial execution.

FOK orders are usually large orders placed by institutional investors, typically paired with a limit or market order. Because of the size of the order, say up to one million shares, the fulfilment of the transaction is left up to the willingness of the market and buyer. If there is no buyer for the exact number of shares at a certain or better price, the trade order is canceled.

How Does Fill or Kill Compare to All or None and Immediate or Cancel?

In essence, a FOK order is a combination of an all-or-none (AON) order and an immediate-or-cancel (IOC) order. The names of these order types are explicit. An AON order requires the broker to execute the entire order quantity at once, or not at all. An IOC order requires the broker to fill the order, or part of it, in a timely manner.

The immediate aspect and the total quantity aspects of the FOK order come from the IOC or AON, respectively. This is also how the FOK order differs from an AON order. An AON order remains active until canceled, an FOK order is canceled immediately if the securities are not available.

Compared to an IOC order, an FOK order has more stipulation of the total quantity. An IOC order allows partial fulfilment. The broker may execute a portion of the total trade and cancel the portion that remains unfilled. An FOK order’s AON aspect makes it different from the IOC.

Closing

Setting a fill-or-kill order to your trades will ensure that a broker will only execute your entire order in one transaction at a target price or limit immediately. The order will not remain open and waiting. An FOK order will keep an investor who wants a large quantity of shares from having to purchase those shares in multiple transactions at different prices.

The average individual investor probably will not trade in the quantities that require an order such as an FOK. Setting unrealistic limits on orders may delay fulfilment by the broker.