Quick definition An order to buy or sell at the closing price, but only if the closing price is at or better than the specified limit price. What it is An LOC order combines the execution timing of a closing auction order with the price control of a limit order. The order waits until the closing auction and executes only if the closing price meets the trader's price requirement. If the closing price is worse than the limit, the order is cancelled. Why it matters LOC orders are used when a trader wants to execute at the close but only at a specific price threshold. A trader might want to sell shares at the close only if the price is $52.00 or higher. If the closing price is $51.99, the order is cancelled and the shares are not sold. LOC versus Market-on-Close (MOC) A market-on-close (MOC) order executes at the closing price regardless of price. An LOC order executes at the closing price only if it meets the specified limit. MOC guarantees execution. LOC guarantees price but not execution. Practical example A trader owns shares and wants to sell at the close if the price reaches $52.00. The trader submits an LOC sell order with a limit of $52.00. At the close, the closing auction determines the closing price. If the closing price is $52.00 or higher, the order fills. If the closing price is $51.99, the order is cancelled and the shares are not sold. The closing auction On US equities exchanges, LOC orders are entered into the closing auction, which runs for 10 seconds before the official close. The auction matches buy and sell orders at the price that would execute the maximum volume, subject to the price limits on the LOC orders. Submission deadline LOC orders must be submitted before a cutoff time, typically 3:50 PM ET on US equity exchanges. Orders submitted after the cutoff are rejected. Regulatory considerations LOC orders are supported on all US equity exchanges. Some international exchanges have different terminology or rules for orders submitted at the close. Always verify the venue's rules before submitting LOC orders. See also - Market-on-close (MOC) - At-the-open (OPG) - Limit order - Closing cross
