When buying a security for the first time, the ASX prohibits the settlement of any transaction that will establish a holding of less than $500 based on the closing price of that stock (also known as an 'un-marketable parcel').
To ensure you meet this requirement* SelfWealth has implemented a buffer calculation on some buy orders to manage intraday security price movements and ensure you have sufficient cash in your account to facilitate the settlement of your purchase.
The rules for the buffer calculation are as follows:
Limit Orders: As the maximum price is fixed on a limit buy order there is no additional buffer calculated on these orders.
Market then Limit Orders: The following tiers have been implemented to accommodate for any intraday market movement, and are based on the current offer price
- < $0.01 – 20 % buffer for market movement
- < $0.10 – 15 % buffer for market movement
- < $1.00 – 10 % buffer for market movement
- < $50.00 – 5 % buffer for market movement
- > $50.00 – 2.5 % buffer for market movement
Please note: when using 'value' instead of 'quantity', the value you input is rounded down to the nearest whole share. As such, an order with a value of exactly $500 will most likely be an un-marketable parcel.
*In the event that a fail fee is levied by the exchange, the fail fee will be charged to the member account.