What is the Exchange Validation for Stop-Loss Limit Order?

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As per Exchange Circular NSE/CM/57613, for Stop-Loss Limit Orders, there are specific validation rules in place. If the difference between the trigger price and the limit price of an SL-Limit Order exceeds the permissible limit, the order will be rejected by the Exchange.

 

The permissible limits vary based on the stock price as give below: 

• When the stock price is more than Rs.50, the difference between the limit price and trigger price cannot exceed 3%.
• When the stock price is less than or equal to Rs.50, the difference between the limit price and trigger price cannot be more than Rs.1.5.

 

 

Example 1 (Stop Loss Buy Order - Stock Price: Below Rs.50)

 

Assuming the stock price of ABC is Rs.40. You intend to place an SL-Limit Buy Order above the current market price, with a trigger price of Rs.45. As per the rule, the limit price should not exceed Rs.46.5 (a difference of Rs.1.5) and not be less than the trigger price of Rs.45.

 

• If you set the limit price to Rs.46, the difference between the trigger price (Rs.45) and the limit price (Rs.46) is Rs.1, which is within the permissible limit of Rs.1.5, and the order will be accepted.
• If you set the limit price to Rs.47, the difference between the trigger price (Rs.45) and the limit price (Rs.47) is Rs.2, which exceeds the permissible limit of Rs.1.5, and the Exchange will reject the order.

 

Example 2 (Stop Loss Buy Order - Stock Price: Above Rs.50)

 

Assuming the stock price of XYZ is Rs.90. You intend to place an SL-Limit Buy Order above the current market price, with a trigger price of Rs.100. As per the rule, the limit price should not exceed Rs.103 (100 + 3%) and not be less than the trigger price of Rs.100.

 

• If you set the limit price to Rs.102, the difference between the trigger price (Rs.100) and the limit price (Rs.102) is Rs.2, which is within the permissible difference limit of 3%, and the order will be accepted.
• If you set the limit price to Rs.105, the difference between the trigger price (Rs.100) and the limit price (Rs.105) is Rs.5, which exceeds the permissible difference limit of 3%, and the Exchange will reject the order.

 

Example 3 (Stop Loss Sell Order - Stock Price: Below Rs.50)

 

Assuming the stock price of ABC is Rs.40. You want to submit an SL-Limit Sell Order below the current market price, with a trigger price of Rs.35. As per the rule, the limit price should be below the trigger price and not be below Rs.33.5.

 

• If you set the limit price to Rs.34, the difference between the trigger price (Rs.35) and the limit price (Rs.34) is Rs.1, which is within the permissible limit of Rs.1.5, and the order will be accepted.
• If you set the limit price to Rs.30, the difference between the trigger price (Rs.35) and the limit price (Rs.30) is Rs.5, which exceeds the permissible limit of Rs.1.5, and the Exchange will reject the order.

 

Example 4 (Stop Loss Sell Order - Stock Price: Above Rs.50)

 

Assuming the stock price of XYZ is Rs.110. You want to submit an SL-Limit Sell Order below the current market price, with a trigger price of Rs.100. As per the rule, the limit price should be below the trigger price and not be below Rs.97.

 

• If you set the limit price to Rs.98, the difference between the trigger price (Rs.100) and the limit price (Rs.98) is Rs.2, which is within the permissible difference limit of 3%, and the order will be accepted.
• If you set the limit price to Rs.92, the difference between the trigger price (Rs.100) and the limit price (Rs.92) is Rs.8, which exceeds the permissible difference limit of 3%, and the Exchange will reject the order.