Market Price Protection (MPP) on Angel One: Safeguarding Your Orders

Why Is My Market Order Protected?

Market Price Protection ensures your market order is converted to a limit order within a predefined price range. The goal? To safeguard you from sudden and extreme price movements, especially in volatile or illiquid markets.

What Does “Your Market Order Is Protected” Mean?

When you see the nudge “Your market order is protected” on the order window, it means your market order will execute as a limit order with a small buffer over the current market price. For instance:

• For cash stocks (NSE or BSE): The protection is set at 0.5% of the Last Traded Price (LTP).
• For futures and options (F&O): The percentage varies based on the type of contract (stock or index) and the price range of the option premium.

This small price buffer prevents your order from being executed at unfavourable prices due to sudden spikes or gaps in the market.

Example Scenarios

1. Cash Stock Example:

• Stock: RELIANCE
• LTP: ₹2,400
• Order: You place a buy market order for 100 shares.
• Protection: MPP converts your market order into a limit order with a maximum price of ₹2,412 (0.5% above LTP). The trade will execute at the best available offer within this price range.

2. Index Options (OPTIDX):

• Contract: BANKNIFTY 25-Dec-24 51500 CE
• Premium: ₹9
• Order: You place a buy market order for 15 lots.
• Protection: Since the premium is below ₹10, MPP applies a 20% buffer. The order executes only if the price stays within ₹10.80 (₹9 + 20%).

3. Stock Futures (FUTSTK):

• Stock: TATASTEEL
• LTP: ₹130
• Order: You place a sell market order for 10 lots.
• Protection: MPP applies a 1% buffer for futures, setting the maximum price at ₹128.70 for the limit order.

How Is MPP Calculated?

The Market Price Protection (MPP) percentage is determined based on the exchange and segment, ensuring that orders are safeguarded against adverse price movements. The table below provides a detailed breakdown of MPP percentages:

What About Provisional Margin?

When you place an order, you may also notice a line in the Margin Required section mentioning Provisional Margin. This is an additional amount temporarily held along with the required margin to accommodate the buffer range provided by MPP.

Why Is Provisional Margin Necessary?

Supporting MPP Buffers: Since MPP converts market orders into limit orders with a predefined price buffer, Provisional Margin temporarily holds extra funds to cover this higher limit price. 

Temporary Hold: The Provisional Margin is only a temporary block. Once the order is either executed (at the best available price within the buffer) or cancelled, the unused portion of the Provisional Margin is immediately released back to your account.

Example:

Instrument: RELIANCE (Cash Stock)

LTP: ₹2,400

Margin for Order: ₹2,40,000 (for 100 shares).

Provisional Margin: ₹1,200 (0.5% of the LTP).

Total Margin Required: ₹2,41,200.

After the order is executed at the best available price within ₹2,412, the unused portion of the Provisional Margin is released back to your account.

You can view this clearly detailed in the Orderpad under the Margin Required section for complete transparency.

What Happens if the Market Moves Beyond the Protected Price?

If the price moves beyond the protected range set by MPP, your market order might remain partially executed or unexecuted until the price returns within the specified limit. This ensures that you’re shielded from extreme volatility, even in highly illiquid stocks or contracts.

Where Can I See the Protection in Action?

The Market Price Protection feature is integrated directly into the order window:

1. Orderpad:
   When placing an order, you’ll notice a message under the Market option that says, “Your market order is protected.” This confirms that the MPP feature is active.
2. Order Details Screen:
   After placing the order, you’ll see the executed price, along with a note explaining the protection applied (e.g., “protected up to ₹16.95”). It’s highlighted for transparency, so you always know how your order was handled.

Why Is This Important for Traders?

Market orders are convenient for quick execution but can be risky, especially in illiquid or volatile conditions. Without protection, your order could execute at prices far away from the LTP, potentially causing significant losses or inefficiencies.

With Market Price Protection, you get:

• Controlled execution: Orders are executed within reasonable price ranges.
• Reduced slippage: Prevents trades from being executed at unexpectedly high prices.
• Transparency: Clear visibility of how and why your order was executed.

Key Takeaways

• Market orders on Angel One are automatically protected to prevent adverse price execution.
• Protection percentages vary based on the asset class, ranging from 0.5% for cash stocks to 40% for low-premium stock options.
• Provisional Margin is an additional amount temporarily blocked for the higher limit price set under Market Price Protection, with any unused margin released after the order is executed or cancelled.
• If you’re trading in volatile or illiquid instruments, MPP ensures your trades are safe and aligned with exchange regulations.

This simple yet effective feature ensures that Angel One executes your market orders efficiently within the defined parameters.

*This is for educational purposes only.

*Investments in securities market are subject to market risks, read all the related documents carefully before investing.