Can Brokers Adjust Limit prices?

charliechan

Experienced member
1,008 119
Hi,

I recently opened an account with a US broker to invest in some stocks. I had a GTC Limit in the market to buy a particular stock. The stock issues a dividend, so no surprises, the stock gaps down. My GTC would have been filled.

For the rest of the day the stock rallies.

The broker however adjusted my Limit price by the amount of the dividend meaning I didnt get filled.

I'm Pi$$ed.

I've been waiting for that price for about a month now. It comes and the broker screws it up.

NOTE: This is REAL stock on an EXCHANGE. I expect this sort of crap with a spread betting firm, not a broker.

Does anyone know if this is with in SEC regulations?

My view is that it it is account owners responsibility to be aware of corporate actions such as dividends, and brokers have no right to interfere.

Thanks for any help....

Charlie
 

timsk

Legendary member
7,386 2,169
. . . My view is that it it is account owners responsibility to be aware of corporate actions such as dividends, and brokers have no right to interfere.
Hi Charlie,
I'm surprised to read this and agree with the sentiment of yours that I've quoted. To start with, I thought your gripe was going to be that price gapped through your order which, as a consequence, didn't get triggered. But that doesn't appear to be the case at all. An obvious question I know - but have you contacted the broker and asked them for an explanation?
Tim.
 

charliechan

Experienced member
1,008 119
Hi Charlie,
I'm surprised to read this and agree with the sentiment of yours that I've quoted. To start with, I thought your gripe was going to be that price gapped through your order which, as a consequence, didn't get triggered. But that doesn't appear to be the case at all. An obvious question I know - but have you contacted the broker and asked them for an explanation?
Tim.

Yeah - the Limit was at 17.63, the stock opened at 17.57 so I should have been filled 6c better.

The broker says this is their policy. I can understand this on a stock split, but not a dividend payment.
 

charliechan

Experienced member
1,008 119
Unless you placed a DNR order your broker will adjust your limit in line with dividend issues.

DNR = do not revise?

It's a retail account as I'm 'investing', not really trading (I make my living from futures). Therefore, functionality is limited and I'm not aware of this facility on their web platform.
 

Purple Brain

Experienced member
1,613 179
Do Not Reduce (not to be confused with Do Not Route). Not sure if it's available from all brokers. Bear in mind you can't use it selling short and it takes the lowest execution priority of any order (along with AON).
 

charliechan

Experienced member
1,008 119
ok thanks for the heads up PB. I've double checked and I dont have this facility - just the basics, and they are all tagged 'mngd' on the order ticket which I assume is managed.

I fail to see any upside with such a policy. The broker earns less commission.
 
 
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