What Is a Market-On-Close (MOC) Order? A Complete Guide for Traders
Introduction to Market-On-Close Orders
A Market-On-Close (MOC) order is an instruction given to a broker to buy or sell a security as close as possible to the official closing price of the trading session. Unlike traditional market orders, which execute immediately at the best available price, an MOC order specifically targets the final minutes—often the final second—of the trading day. This feature makes MOC orders popular among portfolio managers, index fund administrators, and traders who want their executions to align with daily closing valuations, benchmark rebalancing, or end-of-day news releases.
Because closing prices are widely referenced in performance measurements, many institutional investors rely on MOC orders to minimize tracking error against indexes such as the S&P 500 or MSCI Emerging Markets. Understanding how these orders work, their benefits, and their risks can help retail traders and professionals fine-tune their execution strategies and avoid costly surprises.
How Does a Market-On-Close Order Work?
When you submit a Market-On-Close order, your broker holds the instruction until the exchanges designated MOC cut-off time—often 3:45 p.m. Eastern Time for the NYSE and Nasdaq. After the cut-off, the order becomes irrevocable and is included in the closing auction book. During the closing auction, the exchange gathers all MOC, Limit-On-Close (LOC), and other auction orders to determine a single equilibrium price where supply meets demand. The resulting price is printed as the official closing price for that security.
If youre buying, your shares will execute at that final auction price, even if the price fluctuates in the seconds leading up to the close. The same concept applies to sell orders. Because the closing auction consolidates liquidity, traders often receive tighter spreads and reduced slippage compared with regular-session executions.
MOC Order vs. Regular Market Order
Both MOC and market orders guarantee execution, but the timing differs dramatically. A standard market order fills immediately during continuous trading hours, exposing the trader to intraday price swings and potentially wider bid-ask spreads. An MOC order, in contrast, queues your trade for the closing auction, where the price is generally less volatile and where liquidity concentrates.
Another distinction is transparency. Before the auction, exchanges publish an imbalance feed that shows buy and sell pressure for each symbol. Traders can monitor this data and decide whether to submit, cancel, or adjust LOC orders, although pure MOC orders become non-cancelable after the cut-off. Market orders lack this preview and execute without such visibility.
Advantages of Using a Market-On-Close Order
1. Benchmark Matching: Because mutual funds and ETFs calculate net asset value (NAV) using closing prices, executing at the close helps managers synchronize fund holdings with published NAVs.
2. Increased Liquidity: The closing auction typically attracts larger volumes than any other minute of the day, which can translate into better fills for sizeable orders.
3. Reduced Slippage: Consolidated liquidity and a single clearing price often narrow the spread and limit adverse price movement.
4. Simplicity: Traders dont have to monitor markets all day; they can place an MOC order and know the trade will execute at the sessions end.
Potential Drawbacks and Risks
1. Lack of Price Control: Because the order executes at whatever the closing auction dictates, you could end up with a less favorable price than anticipated.
2. Non-Cancelability After Cut-off: Once the exchanges deadline passes, you cannot modify or withdraw the order. Sudden news in the final minutes could move the market against you.
3. Possible Imbalance Volatility: Large order imbalances can cause significant price swings in the auction, particularly in less-liquid stocks, leading to unexpected execution prices.
4. Limited Availability in Some Markets: Not all global exchanges support MOC orders, and some brokers may restrict access to retail clients.
When Should You Use an MOC Order?
Many investment strategies benefit from MOC executions. Index‐tracking funds require end-of-day pricing to minimize tracking error. Rebalancing portfolios at month-end or quarter-end often involves MOC orders to match benchmark reconstitution. Event-driven traders may also favor MOC orders ahead of earnings announcements released after the bell to avoid intraday volatility while still having exposure to post-close news.
Retail investors placing systematic contributions—say, buying shares on payday—can leverage MOC orders to bypass active monitoring and reduce execution anxiety. However, if youre trading thinly traded penny stocks or reacting to breaking midday news, a standard limit or market order may offer better control.
How to Place a Market-On-Close Order
1. Confirm Eligibility: Check whether your brokerage platform and the target exchange support MOC orders for the security you intend to trade.
2. Select Order Type: In the order ticket, choose “Market-On-Close” or the equivalent option. Specify the share quantity and direction (buy or sell).
3. Watch the Cut-Off Time: Submit the order before the exchanges published MOC deadline. Missing the cut-off forces the order to default to the next trading days close, or it may be rejected outright.
4. Monitor Imbalance Data: If available, track imbalance feeds to gauge potential auction volatility. Although you cant cancel after the deadline, the data can inform hedging or offsetting strategies.
Regulatory and Exchange Rules
Each exchange sets its own rules for Market-On-Close orders. The NYSE, for example, disallows the entry of new MOC orders after 3:45 p.m. ET and publishes imbalance information at 3:50 p.m. ET. Nasdaq offers a similar structure but may have different cut-off times for exchange-traded funds. Regulators such as the U.S. Securities and Exchange Commission (SEC) oversee auction integrity, while circuit breakers can suspend trading and override MOC instructions during extreme volatility. Always review your brokers disclosures and the specific venues guidelines before relying on MOC orders.
Final Thoughts
A Market-On-Close order is a strategic tool for traders seeking executions at the days official closing price. By concentrating liquidity and synchronizing trades with benchmark calculations, MOC orders can improve performance measurement and reduce slippage. However, they also carry unique risks, including non-cancelability and exposure to late-breaking news. Understanding the mechanics, cut-off times, and potential imbalances allows you to decide whether an MOC order aligns with your objectives. As with any trading technique, proper risk management and due diligence are essential for success.