Understanding What Is Auto Square Off Block: Square-off is the style of settlement in intraday trades where the traders sell the shares they have bought or buy the shares they have sold during the day in order to close their open positions.
If these positions are not closed before the prescribed time limit, they are automatically at the time that is mentioned by the exchanges.
While coming across the concepts of square-off and auto square-off, you might have also come across the term called auto square-off block.
In this article, we are going to explain the concept of what is Auto-square off the block in the stock market.
What Is Auto-Square?
Before understanding Auto Square-off Block, let us first understand what auto-square of position means in the stock market.
Suppose an individual fails to close his/her open position by taking the opposite trades before the square-off timings. In that case, these open positions will automatically be closed by the trading platform after the deadline. This is known as an auto-off.
If the positions held are squared off automatically, the brokers will charge a penalty fee on you for closing the positions on your behalf. These charges are known as auto-square-off charges
It should be noted that shares purchased on delivery will not be auto-squared off as they can be held for any number of days.
Now that we understood what is auto square, we move ahead and see what is auto square off in the stock market
What Is Auto square Off Block?
If an individual places an MIS order after the specified intraday auto square-off time, which is normally 15-30 minutes before the market closes, the order will be rejected by the broker’s server. This is known as Auto Square off the block.
While your order gets rejected by the broker, the following error will be displayed on your screen: RMS: Auto Square Off Block
Here the RMS stands for Risk Management System which is an automated system set up on the broker’s server which checks the validity of your orders.
The RMS will only send valid orders to the exchange and will reject any orders that have discrepancies.
Time Limit To Square Off Different Positions
Let us now look at the square-off timings in different positions in the market after which the auto square-off block will occur
1. Square Off Time In Equity Or Cash Segment
The individuals can take up MIS positions in the cash segment between 9:15 AM to 3:20 PM after which the open MIS positions will automatically be squared off by the exchange.
Any MIS orders in the cash segment entered after 3:20 PM will be rejected by the broker’s server under Auto square off block
2. Square Off Time In Equity Derivative Segment
MIS positions in the equity derivative segment can be taken between 9:15 AM to 3:25 PM after which any open position will be squared off automatically.
Any MIS orders in the Equity Derivative Segment entered after 3:25 PM will be rejected by the broker’s server under Auto square off block
3. Square Off Time In Currency Derivative Segment
MIS positions in the Currency Derivative Segment can be taken between 9:00 AM to 4:45 PM after which any open position will be squared off automatically.
Any MIS orders in the Currency Derivative Segment entered after 4:45 PM will be rejected by the broker’s server under Auto square off block
4. Square Off Time In The Commodities Segment
Any Intraday positions in the commodity derivative segment should be taken between 9:00 AM to 25 minutes before the closing of the market. Any MIS positions taken after this time will be rejected by the broker’s server under Auto square off block.
The Commodity segment is divided into three categories and each of the categories has separate market timings. Below is the table showing the market timing for each of the categories:
|Trade End Time||Trade End Time|
|Commodity Category||Trade Start Time||After the Start of US daylight savings in the Spring season (March)||After the end of US daylight savings in the Spring season (November)|
|Non-Agricultural Commodities||09.00 AM||11.30 PM||11.55 PM|
|Agricultural and Agri-processed Commodities (with international reference linkages)||09.00 AM||09.00 PM|
|Agricultural and Agri-processed Commodities (without international reference linkages)||09.00 AM||09.00 PM|
Daylight savings is a practice in the US where the time is changed to daylight savings time, which moves the clock forward one hour. This increases the amount of daylight in the evenings.
In this article, we covered what is auto square off block and auto square off block and the timings to take MIS positions in different segments.
Although Auto Square off-block may seem like an inconvenience to traders, it is set by the brokers to avoid any last-moment volatility and to protect the traders from its risks.
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