When buying a security for the first time, the ASX prohibits the settlement of transaction that will establish a holding of less than $500 based on the closing price of that stock (Marketable Parcel). To ensure you meet this requirement SelfWealth have implemented a buffer calculation on all buy orders to manage intraday security price movements to ensure you have sufficient cash in your account to facilitate the settlement of your purchase.
The rules for the buffer calculation as as follows:
Limit Orders: As the price is set on a limit 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 is 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
Note #1: For a Market (then limit) order the value is rounded down to the nearest whole share. i.e. Setting a Market order for $500 will round down to a value under a marketable parcel and not be able to be submitted into the market.
Note #2: Any fail fees incurred on failed trades will be charged to the member account.