What it means
Ordinary orders can be filled in pieces, because the market matches whatever quantity is available at your price. If you want 10,000 shares of a thinly traded company and only 1,200 are on offer at your limit, a standard order takes the 1,200 and waits.
An all or none instruction refuses that partial fill and leaves the whole order unexecuted until the full quantity can be matched. The reason to accept that risk is usually cost or position integrity.
Partial fills in illiquid securities can trigger multiple commission charges, and a half built position may not do the job it was intended for, particularly when the trade is one leg of a hedge or a paired transaction. Getting half a hedge is sometimes worse than getting none.
It helps to keep all or none separate from two similar sounding instructions. Fill or kill demands the entire quantity immediately or cancels the order outright, and immediate or cancel takes whatever is available at once and cancels the rest.
All or none is more patient than either: it holds in the order book, waiting for a moment when the full size is available. The offering version of the term works on the same principle at a much larger scale.
In an all or none underwriting, the issuer specifies that unless the entire offering is sold, the deal is withdrawn and subscription money is returned, usually from an escrow account. Companies use it when a partial raise would leave them with dilution and no realistic path to their plan.
The trade off is straightforward and worth stating plainly. An all or none order will typically sit longer, may miss the price move that prompted it, and in genuinely illiquid names may never execute at all.
It suits patient investors in small or infrequently traded securities and suits nobody who needs to be in or out of a position today.
In practice
Real-world examples.
Example
A private investor building a stake in a small listed brewery uses all or none orders for blocks of 5,000 shares, because his broker charges a flat commission per execution and partial fills would multiply the cost. Two of his orders expire unfilled over a quarter, which he accepts as the price of the approach.
Example
A fund manager wants 40,000 shares of a small cap as the second leg of a paired trade against a competitor's stock. A partial fill would leave the position unbalanced and exposed to the sector rather than to the relative performance she is targeting, so all or none is the only sensible instruction.
Example
An early stage company launches a $4,000,000 offering on an all or none basis, with funds held in escrow until fully subscribed. The raise reaches $3,100,000 by the deadline, the offering is withdrawn and every subscriber's money is returned, because a partial raise would not have funded the factory the plan depended on.
Think of it
“All or none means complete fill only-no partial execution allowed.
Formula
Calculation
The cost of an all or none instruction is best shown as a comparison: total cost of a piecemeal fill versus total cost of a single complete fill, for the same quantity.
An investor wants 10,000 shares of a thinly traded engineering company. Placing an ordinary limit order at $12.00 fills 2,000 shares immediately for 2,000 x $12.00 = $24,000, after which the price drifts up and the remaining 8,000 shares are bought over two days at an average of $12.45, costing 8,000 x $12.45 = $99,600. Total cost = $24,000 + $99,600 = $123,600, an average of $123,600 / 10,000 = $12.36 per share.
Had the investor used an all or none order and waited three days for a natural seller of the full size at $12.20, the total cost would have been 10,000 x $12.20 = $122,000, an average of $12.20. The saving is $123,600 - $122,000 = $1,600, or $0.16 a share. The risk, of course, is that no such seller appears and the position is never established at all.Case study
Seen in the real world.
The following is an illustrative, invented scenario. Trellis Growth Partners, a fictional boutique fund with $70,000,000 under management, specialised in small companies where daily traded volume was often below $200,000. The founding manager placed ordinary limit orders and had grown used to positions being built over three or four weeks in unpredictable pieces.
A review of one year's trading in this illustrative example showed the pattern clearly. Positions built piecemeal cost an average of 1.4% more than the price at the moment of the decision, and in eleven cases the fund had been left holding a partial position for over a month while waiting for the rest. The manager switched to all or none orders for anything below a defined liquidity threshold and negotiated with a broker to source natural blocks.
The result was mixed rather than uniformly good, which is why the case is instructive. Average build cost fell to about 0.6% above the decision price, but roughly one order in six never filled at all, and two of those missed positions later performed strongly. The fund kept the policy on the view that a known, measurable saving beat an unknowable opportunity cost.
Watch out
Common mistakes.
- Confusing all or none with fill or kill, and expecting an immediate answer when an all or none order will sit patiently in the book.
- Attaching all or none to an order in a heavily traded large company, where partial fills were never a real risk and the instruction only reduces the chance of execution.
- Forgetting that an all or none order can expire completely unfilled, and then treating the missed position as a market event rather than a consequence of the instruction chosen.
Questions
People also ask.
Does every broker support all or none orders?
Most do for equities, though availability varies by venue, security type and order size, and some platforms apply a minimum quantity before the instruction can be used.
Does an all or none order guarantee a specific price?
No, it only governs quantity, so it is normally combined with a limit price to control both how much and at what level.
What happens to my money in an all or none offering that fails?
Subscriptions are typically held in escrow and returned in full if the offering does not reach its target, which is the protection the structure is designed to give investors.
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