What is Automated Order Processing (AOP)?
Automated Order Processing (AOP) is a system that facilitates the placement and automated processing of client order instructions for direct entry to the market without manual intervention.
At all times, CommSec is required to maintain a fair and orderly market. Accordingly, all orders submitted via an AOP must be screened by pre-trade filters (also known as vetting rules).
How does Automated Order Processing (AOP) work?
The AOP system typically takes place over four steps:
- A customer enters an order
- The order is vetted by AOP pre-trade filters
- If the order passes through the filters, the order is entered into the market
- If the order triggers a filter, the order is routed for manual evaluation
What are pre-trade filters?
The purpose of pre-trade filters is to detect any order that may negatively impact the fair and orderly nature of the market and stop that order from flowing directly to the market.
What do AOP pre-trade filters identify?
CommSec's pre-trade filters can identify a range of different scenarios. This includes, but is not limited to:
- Orders priced too far from current market price
- Large volume orders that may disrupt the fair and orderly nature of the market
- Layering of orders that may be designed to give the false appearance of volume/demand
- Aggressive orders where if executed, would excessively increase the price of the security
- Orders that may push up the stock price upon close
- Buy and sell orders being placed on a stock at the same time and/or at the same price
What happens if my order triggers a pre-trade filter?
All orders submitted through the AOP systems are screened by pre-trade filters. In some cases, your order may trigger a filter, meaning:
- Your order may be rejected. If so, you will be immediately presented with a message on the platform you used to place that order, for example, on the CommSec Mobile App or CommSec website. Please review the message and reassess your order prior to re-submitting.
- Your order may be routed for manual assessment. If so, a CommSec representative will assess the market conditions and your instruction and either process the order or contact you to discuss your order.
Given that CommSec is obligated to maintain a fair and orderly market at all times, there may be instances where we may have to decline or reject an order.
What are the benefits of Automated Order Processing (AOP)?
AOP systems are designed to:
- Increase efficiency
- Increase the speed of order processing
- Enable CommSec to handle much larger volumes of orders than manual processing would allow
What is CommSec's AOP framework?
- Competent and experienced people
- AOP related training materials
- Policies and procedures
- System architecture, design and maintenance
- Change management processes
- Monitoring and supervision
- Management reporting, accountability and transparency
- Governance
We're here to help
If you do not understand why an order has been declined or rejected, or if you require more information on Automated Order Processing, please contact the CommSec Customer Engagement Centre on 13 15 19 to speak to one of our representatives.
Important Information
For more information on the key regulatory requirements that govern the operation of an Automated Order Processing system, please refer to the following regulatory documents:
- ASIC Regulatory Guide 241 – Electronic Trading
- ASIC Market Integrity Rules (Securities Markets) 2017 - Part 5.6 – AOP Filters, Conduct & Infrastructure
- ASX Operating Rule 1300 & 1301- Fair and Orderly Markets
- Cboe Operating Rule 5.1 – Fair and Orderly Markets
