Why did Zerodha push equity AMO orders from 9.15 am to 9 am and why are equity SL orders not allowed?


I read this link about the change in order placement time of AMO orders. It said that AMO (SL) orders for equity not allowed, why was this done? How does it benefit me as a trader, can someone explain in detail.


A little technical explanation,

All brokers are connected to the exchanges over leased lines. These leased lines have a certain order handling capacity per second. We probably have the highest among retail brokers, multiple leased lines adding to almost 1000 orders per second. If more than 1000 orders per second were placed, they get in a queue and platform experience drops for everyone else. During market hours this order handling capacity is almost 3 times of our peak load, we have over capacity to ensure experience doesn’t drop with spike in volatility and orders.

AMO orders are collected from market closing until next day market opening and placed at 9.15 am at one time. When it is placed, these are orders are sent one by one for all clients. Usually takes between 5 to 10 seconds. Last week though something changed, maybe the all time highs or something, suddenly we had tens of thousands of AMO orders. So when they were placed, all of them got into queue and brought down the platform experience for all other clients also significantly. When deciding for how best to handle this, we realized that such AMO orders for equity can be placed at pre-market itself, and it would also benefit traders in the below two ways.

  1. Since the orders are placed on the exchange at 9am when normal market is not open. Whatever is the order volume, it won’t cause a drop of experience to anyone. Platform performance at 9.15 am has gone up significantly - especially for equity traders.
  2. Since these orders are placed in pre-market, they are already in top of priority on order queue. So the chances of a better execution price at the earliest time is much higher.

Btw AMO for F&O orders can’t be placed at 9 am as F&O doesn’t have pre-market session. But AMO for F&O is not really a concern as that number is not much. AMO’s over 90% are equity orders (a lot of clients place 1 share orders, which accentuates the issue). By moving AMO’s to pre-market the order execution speeds at market open is probably the best in the business now.

The only disadvantage is that pre-market session by exchange doesn’t support trigger orders (SL). So we had to temporarily stop SL from AMO orders. We will soon start it again, where only SL AMO orders will be placed at 9.15 am, the limit and market AMO will be placed at 9 am.