• Market Volatility Overview
  • Addendum to the Alpaca Securities Customer Agreement

GUILD FINANCIAL: Market Volatility Overview


A volatile market is often characterized by extreme price fluctuations and widespread uncertainty. We (J2 Financial Technologies, Inc., d/b/a “Guild Financial”) want to highlight things that may happen during extreme market volatility. You can read more about market volatility here and in the customer agreement.

How Are Orders Handled During Market Volatility?

1. Order Routing

Guild Financial through its broker-dealer Alpaca Securities, generally routes orders to market makers for execution. During periods of market volatility, those market makers may adjust their order handling procedures, which could impact your order. For example, the execution of your order may be delayed. In extreme circumstances, your order might not execute.

2. Trading Halts.

During market volatility, there is a greater risk that trading in a security may be halted. Trading halts are initiated by the specific stock exchange where the stock is listed or by the Securities and Exchange Commission.

3. Delays

High volumes of trading at the market opening or intra-day may cause delays in execution and executions at prices significantly away from the market price quoted or displayed at the time the order was entered.

How Do Different Orders Work During Volatile Markets?

1. Order Types: Guild Financial through its broker-dealer Alpaca Securities supports different types of orders, which are described here. In volatile markets, limit orders and stop orders have risks that you should understand.

a. If you place a limit order, it will execute only at the specified limit price or better. This provides price protection in a moving market, but there is the possibility that the order will not be executed. Stop orders have specific risks in volatile markets:

i. Stop prices are not guaranteed execution prices. A “stop order” becomes a “market order” when the “stop price” is reached and firms are required to execute a market order fully and promptly at the current market price. Therefore, the price at which a stop order ultimately is executed may be different from the “stop price” you input, particularly in a highly volatile market, where prices are rapidly fluctuating. This means that while you may receive a prompt execution of a stop order that becomes a market order, during volatile market conditions, the execution may be at a significantly different price from the stop price.

ii. Stop orders may be triggered by a short-lived, dramatic price change. During periods of volatile market conditions, the price of a stock can move significantly in a short period of time and trigger an execution of a stop order (and the stock may later resume trading at its prior price level). You should understand that if your stop order is triggered under these circumstances, you may sell at an undesirable price even though the price of the stock may stabilize during the same trading day.

iii. Sell stop orders may exacerbate price declines during times of extreme volatility. The activation of sell stop orders may add downward price pressure on a security. If triggered during a precipitous price decline, a sell stop order also is more likely to result in an execution well below the stop price.

iv. Placing a “limit price” on a stop order may help manage some of these risks. A stop order with a “limit price” (a “stop limit” order) becomes a “limit order” when the stock reaches the “stop price.” A “limit order” is an order to buy or sell a security for an amount no worse than a specific price (i.e., the “limit price”). By using a stop limit order instead of a regular stop order, a customer will receive additional certainty with respect to the price the customer receives for the stock. However, you should also note that because Guild Financial may not sell for a price that is lower (or buy for a price that is higher) than the limit price selected, there is the possibility that the order will not be executed at all. A stop limit order may be desirable if you wish to prioritize achieving a desired target price more than getting an immediate execution irrespective of price.

Still have questions? Contact Guild Financial Support at support@guild.financial

Addendum to the Alpaca Securities Customer Agreement Related to Fractional Shares

In consideration of Alpaca Securities allowing me to purchase and sell fractional interests of whole equity securities (“fractional shares”) from and to Alpaca Securities acting as principal, I represent and agree with respect to all Accounts, whether margin or cash, to the terms in this addendum (“Addendum”) to the Alpaca Securities, LLC Customer Agreement (“Agreement”) set forth below. Unless noted otherwise, defined terms have the same meaning here as in the Agreement. In the case of conflict between the terms of the Agreement and the Addendum, the terms of the Addendum will control for purposes of the subject matter herein. I acknowledge and understand that:

1. Alpaca Securities rounds all holdings of fractional shares to the sixth decimal place, the value of fractional shares to the nearest cent, and any dividends paid on fractional shares to the nearest cent.

2. Alpaca Securities will not accept dollar-based purchases or sales of less than $1.00. I will receive proceeds from the sale of any whole or fractional shares rounded to the nearest $0.01.

3. A vendor employed by Alpaca Securities will aggregate any proxy votes for fractional shares of Alpaca Securities’ customers with all votes reported to the issuer or issuer’s designated vote tabulator. I understand that while Alpaca Securities’ vendor will report such proxy votes on fractional shares, the issuer or tabulator may not fully count such votes.

4. Alpaca Securities will execute all orders that include fractional shares (“Fractional Orders”) on a principal basis.

5. To the extent that Alpaca Securities must purchase or sell shares in the market to fulfill any part of my Fractional Order, the fractional component of that order will be fulfilled at the execution price Alpaca Securities received for the corresponding whole shares.

6. To the extent that Alpaca Securities fulfills my Fractional Order for national exchange-listed securities (“NMS Securities”) entirely out of its inventory and without purchasing or selling shares in the market (“Inventory Fulfillment”), Alpaca Securities will endeavor to price such shares or fractional shares at a price between the National Best Bid and Offer (“NBBO”) at the time of the order during market hours, or, for such orders made during extended hours trading (9:00-9:30 a.m. and 4:00-6:00 p.m. Eastern), Alpaca Securities will endeavor to price such orders between the best bid and offer at the time of the order, as reported by an external vendor (“Vendor BBO”). For Inventory Fulfillment of Fractional Orders for securities not listed on a national exchange (“Non-NMS Securities”) made during market hours as well as extended hours trading, Alpaca Securities will endeavor to price such orders between Vendor BBO.

7. Alpaca Securities only accepts market orders for fractional shares at this time and does not permit limit orders for fractional shares.

8. Fractional shares within my Account (i) are unrecognized, unmarketable, and illiquid outside the Guild Financial platform, (ii) are not transferrable in-kind, and (iii) may only be liquidated and the proceeds withdrawn or transferred out.