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Discretionary Limit™

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Rests at the limit price. If the Signal fires, it reprices to one tick outside the unstable price.

  • Lit or dark
  • Designed to improve displayed trading for all market participants
About

Discretionary Limit (D-Limit) behaves like a regular limit order, except when the Signal predicts the price is about to change.

This triggers D-Limit orders to automatically reprice to 1 MPV outside that level.

Discretionary Limit™

Functionality

Example Scenario

Quote is Stable. The Signal is "Off."

The NBBO is $10.10 x $10.14. D-Limit buy order is booked at $10.10. The quote is stable.

ISO Sell order with a $10.09 limit crosses the spread; trade occurs at the resting price of $10.10.

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Quote is Crumbling. The Signal is "On."

The NBBO is $10.10 x $10.14. A D-Limit buy order with a limit of $10.10 is booked at $10.09, 1 MPV below the unstable price ($10.10). The quote is unstable.

ISO Sell order with a $10.09 limit crosses the spread; trade occurs at the resting price of $10.09.

Two

Example Scenario

One
Two
Discretionary Limit™

Workflow

This diagram details a base case messaging flow for a client sending a D-Limit order to IEX Exchange, the Signal (i.e., Crumbling Quote Indicator or CQI) triggering, repricing of the order, and finally a client cancellation of the order.

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Parent-Order Performance That Meets the Mark

D-Limit is designed to deliver better-performing child orders, which in turn can roll up into better parent-order performance. Powered by IEX Exchange's Signal, D-limit works to minimize adverse selection and deliver genuine spread capture, so you’re buying a stable bid—not a bid that ends up becoming the offer. D-limit is also designed to obtain pre-trade price improvement and is the only displayed exchange order type that enables users to achieve prices better than their initial resting price.

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FIX Details
3.5 Trillion
Notional value traded on IEX Exchange using D-Limit since its inception
75%
Proportion of IEX Exchange's lit trading volume using D-Limit
19%
Of Institutional brokers' D-Limit volume sees 2¢/share average Price Improvement*
75%
Price stability with D-limit vs 28% price stability on other exchanges**

Example Scenario

One
Two
Quote is Stable. The Signal is "Off."
The NBBO is $10.10 x $10.14. D-Limit buy order is booked at $10.10. The quote is stable.

ISO Sell order with a $10.09 limit crosses the spread; trade occurs at the resting price of $10.10.
Quote is Crumbling. The Signal is "On."
The NBBO is $10.10 x $10.14. A D-Limit buy order with a limit of $10.10 is repriced to $10.09, 1 MPV below the unstable price ($10.10). The quote is unstable.

ISO Sell order with a $10.09 limit crosses the spread; trade occurs at the resting price of $10.09.

Example Scenario

One
Two
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Discretionary Limit™

D-Limit works like a standard limit order but is the only exchange order type of its kind designed to protect orders from adverse selection.

  • Designed to improve displayed trading for market participants
  • Available for lit or dark trading

When IEX Exchange's unique Signal anticipates a price shift, D-Limit orders are automatically repriced to one Minimum Price Variation (MPV) outside the predicted unstable price level. This dynamic repricing mechanism is designed to protect against unfavorable price movements.

Real Results

D-Limit's impact.
New Functionality Improves D-Limit Hit Rates
D-Limit’s Cancel/Reprice functionality increased hit rates from 27% to 35%.
Significant Savings
19% of Institutional brokers' D-Limit volume experiences an average price improvement of 2¢/share.
Enhanced Stability with Signal V6
D-Limit is powered by the new Signal V6, designed to predict more price changes while maintaining the same accuracy.

D-Limit in Action

Explore the mechanics of D-Limit through a detailed workflow diagram, illustrating the journey of an order from placement to execution. Then, see real-world scenarios that demonstrate D-Limit's dynamic response in varying market conditions.
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Workflow

This diagram details a base case messaging flow for a client sending a D-Limit order to IEX Exchange, the Signal (i.e., Crumbling Quote Indicator or CQI) triggering, repricing of the order, and finally a client cancellation of the order.

Cancel/Reprice Functionality

D-Limit now offers a Cancel/Reprice functionality, addressing Members' needs for better order management without consuming the restatement message. Members who opt-in to this functionality can configure D-Limit orders for automatic action 10 milliseconds post-Signal fire, enhancing price discovery and liquidity on IEX Exchange.

Resources

More information on D-limit.
Pricing
Starting September 2023, displayed adding volume on IEX Exchange earns a 4 mil rebate, with $0.0010/share charged for removing liquidity.
Signal V6
D-Limit is powered by the new Signal V6, designed to predict more price changes while maintaining the same accuracy.
Restatement Messages
When D-Limit orders are restated, users receive a restatement message, containing the price to which D-Limit orders were moved.
Insights

The Latest on D-Limit

The only exchange order type designed to protect resting displayed orders.

Experience true spread capture, better markouts, and better price improvement.

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* "Institutional Brokers” defined as Full-Service and Agency broker-dealers, based on IEX classifications on a best-efforts basis by Member firms’ trading sessions.
** Stable volume is defined as volume after which there was not an NBBO change in the 2ms following a trade. Stability comparisons made on volume taking place at the NBBO.