Not Held Basis Order: Giving the Broker Flexibility to Get the Best Possible Execution

A Not Held Basis Order is a type of trading instruction that gives a broker or dealer discretion over the timing and price of a trade, with the goal of achieving the best possible execution for the client.
Unlike a normal “held” order, where the broker must execute the trade immediately at the best available price, a not held order allows the broker to use judgment to decide when and how to enter the market.

In simple terms, a Not Held Basis Order tells the broker: “Use your experience to get me the best price — don’t rush the trade.”

Core Idea

In a not held order, the trader gives the broker flexibility and responsibility for execution.
The broker is not strictly bound to act right away or at the current market price. Instead, the broker can wait for better market conditions or split the order into smaller trades to reduce market impact.

This instruction is common for large or sensitive trades, where executing immediately could move the market or lead to poor pricing.

In Simple Terms

Think of it as hiring an expert to negotiate on your behalf.
You’re saying: “I trust your judgment — execute the trade when you think the timing and price are best, within reasonable limits.”

Example

Suppose an institutional investor wants to sell 200,000 shares of a company.
Selling all at once could push the stock price down.

So, they place a not held order with their broker.
The broker might:

Sell the shares gradually throughout the day.

Wait for periods of higher demand.

Aim for a better average sale price.

If the order were “held,” the broker would have to sell immediately at the best available price — even if that meant getting a lower overall return.

Real-Life Application

Not held basis orders are widely used by:

Institutional investors managing large volumes.

Portfolio managers who want to minimize market disruption.

High-net-worth clients seeking professional execution strategies.

Brokers use their expertise, access to liquidity, and trading algorithms to optimize results while remaining within regulatory and client constraints.

Regulatory Context

Under U.S. SEC Rule 11a1-1(T) and similar global regulations, a “not held” instruction means the broker acts as an agent with discretion, not as a principal guaranteeing price or timing.
It also means the broker is not legally responsible if the trade fails to achieve the absolute best possible price, as long as they exercised reasonable care and skill.

Common Misconceptions and Mistakes

“The broker can do anything.” The broker still follows the client’s objectives and risk limits but has discretion over timing and method.

“It guarantees a better price.” It allows flexibility, but results depend on market conditions and execution strategy.

“It’s only for large trades.” While common for big orders, retail clients may use it too in fast-moving markets.

“It means the broker owns the order.” The broker acts on behalf of the client, not for their own account.

Related Queries Traders Often Search For

What is the difference between a held and not held order?

Why do institutions use not held basis orders?

Does a not held order protect against slippage?

How do brokers handle not held orders?

Are not held orders common in electronic trading?

Summary

A Not Held Basis Order gives a broker the discretion to decide when and how to execute a trade, aiming for the best possible outcome instead of immediate execution.
It is often used for large or complex trades where timing and market impact matter.
While it provides flexibility, it also requires trust in the broker’s judgment and skill to achieve favorable execution.