Dealing with (order) rejection

David Kimberley

November 21, 2018

David Kimberley

Rejected orders, rare but irritating parts of using a brokerage platform. Read on to see some of the underlying causes causing this, and how Freetrade is working to reduce them.

We know a handful of our users have experienced trades on the app rejected by the market. While it’s relatively unusual, it’s frustrating when it does happen. No-one likes being rejected. 😢

So we wanted to share a bit more on the underlying causes, and how we’re working to reduce them.

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Why do they happen?

There are two main reasons for rejected trades:

Price increases too much 💸

  • This can happen, particularly on Basic orders where the amount put in is very close to the price for one share. If the prices increases at all, the queued money isn’t enough to buy a single share. The trade fails because you can’t (currently!) buy less than a whole share.

No-one trading ⏸

  • The RSP (retail service provider) network is a set of UK market makers that retail brokers like us connect with to execute customers’ trades. In some cases, especially if the stock price is moving quickly, none of our counterparties on the RSP network is willing to take the other side of those trades. With no-one to trade with, we can’t execute them. Luckily, this normally only lasts a few minutes for a given stock, so if you wait a short time and try again the trade often goes through.

For the first reason we’re working on our messaging. It looks like most people only experience this once and then slightly increase the amount on future orders to build in a buffer. 🛡

The second is a bit more complex, so I’ll talk a bit more about how we’re improving it. 🙏

What are we doing about it?

While rare, we still want to reduce the number of rejected trades as much as possible.

Traditional brokers avoid this problem by operating a manual trading desk. If trades are rejected by the automated system, a broker picks up the phone and barters for a replacement.

As a tech company, our approach to this problem is different! 😁 We’re working on a couple of routes.

In the short term, we’re adding more RSP counterparties. More counterparties means more buyers and sellers, so we’re more likely to see quotes for the other side of your trades.

In the longer term, we’ll add even more trading venues, so if the RSP network isn’t quoting we can reroute to one that is. 💪

We also expect fewer Basic orders to fail as our trading volumes increase. Larger orders are more attractive to the RSPs and more likely to get them to quote.

If you do have an order rejected, you can buzz us on live chat to get the detail. It’s extremely likely to be one of the two possibilities above. 🔎

If it was a Basic order for just one share, it’s even more probable it was the ‘price move’ scenario.

We’re working hard on making rejected orders even rarer. We hope knowing the context behind it helps! And remember: if one of your orders is rejected, you can always try again the next day. ✅

Important Information

This should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice.

When you invest, your capital is at risk. The value of your portfolio can go down as well as up and you may get back less than you invest. Past performance is not a reliable indicator of future results.

Eligibility to invest into an ISA and the value of tax savings depends on personal circumstances and all tax rules may change.

Freetrade is a trading name of Freetrade Limited, which is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales (no. 09797821).

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