Held order
A held order is an order that must be executed immediately at the best available price, with no discretion given to the executing broker over timing or price. Ordinary market orders are held orders by default.
A held order requires the person handling it to act right now. The executing broker is "held" to immediate execution at the best price currently available and cannot wait for a better price, work the order across the day, or break it into pieces at their own discretion. Unless a customer says otherwise, an order arriving at a firm is treated as held.
The contrast that gives the term its meaning is the not-held order, in which the customer grants the floor broker or trading desk discretion over time and price. If a customer wants 100,000 shares bought without pushing the price up, they mark the order not held so the broker can spread the buying out over hours. A held order for the same 100,000 shares would be sent straight to the market, likely moving the price against the customer.
Held orders protect the customer in a different way: because execution is immediate and the broker has no latitude, there is no room for the broker to time the market badly and then blame conditions. The tradeoff is price impact. Held status also matters for accountability — if a held order is not executed promptly at the prevailing quote, the firm may owe the customer the difference.
Note that "held" describes broker discretion, not the order type itself. A held order can still be a market order or a limit order; marking it held simply means the broker must act on it immediately rather than working it. The Series 7 exam tests held versus not-held orders under additional order specifications, often alongside discretionary authority questions, because both involve how much latitude someone other than the customer has over an order.
Key takeaways
- A held order must be executed immediately at the best available price.
- The executing broker has no discretion over the timing or price of a held order.
- Orders are held by default; a customer must specifically mark an order "not held" to grant discretion.
- Not-held orders let a broker work a large order over time to reduce market impact.
- Held status describes broker discretion, not whether the order is a market or limit order.