Intermarket Sweep Order (ISO)

An Intermarket Sweep Order (ISO) is a type of stock market order that allows traders to execute large block trades across multiple exchanges simultaneously, bypassing the requirement to seek the best available price on other exchanges. This order is typically used by institutional traders to ensure rapid execution of trades without being hindered by price-matching obligations. ISOs are a critical tool for high-frequency traders and institutions handling large volumes of stock transactions.

Example

A hedge fund places an ISO to buy 100,000 shares of a stock, allowing the order to be executed across multiple exchanges without waiting for the best price.

Key points

• Allows for the rapid execution of large block trades across multiple exchanges.

• Bypasses the need to match the best available price on all exchanges.

• Commonly used by institutional traders and high-frequency trading.

Quick Answers to Curious Questions

Why do traders use intermarket sweep orders?

Traders use ISOs to ensure large orders are executed quickly across multiple exchanges without the delay of price-matching obligations.

What are the advantages of ISOs for institutional traders?

ISOs provide faster execution and liquidity, allowing traders to handle large transactions efficiently without waiting for the best price on each exchange.