How does Zerodha (or any other broker) handle auto square off? Is it handled manually by trading desk or is there an algo deployed to place orders without affecting market price?
this is a very interesting question. hmm. i think it would be algo deployed, else brokers have such huge client base, handling this manually would be madness.
I am wondering if brokers use some sort of VWAP matching algo. @nithin
The systems identify positions that are of type ‘Intraday’ and place counter market orders to close positions. It’s a function that’s provided by the OMS provider. If the counter you have traded in is illiquid, chances are that your square off could happen at price away from the theoretical price.
So at around 3:15, we should expect lot of volatility due to market orders, right?
Not necessarily, each broker has their own squareoff time, also orders can be both sides, I mean buy and sell orders on each scrip and these won’t be much to have any noticeable impact cost.