A not held basis order is a type of market or limit order where the broker is given discretion to execute at the best possible price by timing the deal. The broker is not liable for any costs incurred or missed opportunities that this delay incurs, and a not held basis order is a strong statement of trust in your broker. This type of order may be used with any asset class, including equities, forex or indices.
Many orders are simple for execution, with the broker charged with an immediate deal at the going rate. Any difference from that rate would be considered slippage. But on market or limit orders brokers are permitted to trade up to or below a certain price, and not held basis orders are a subtype of this category.
Clients use not held basis orders when they have a large position that may be tricky to exit without moving the market. Giving their broker discretion on when and how to execute the deal – and critically, at what price – offers the maximum flexibility and the opportunity of improving on the market price. This of course comes with the risk that the market may move against them, and for that reason the broker is exempt from all liability in these circumstances.
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