Limit-on-close order

A limit-on-close order is a limit order that only participates in the closing auction, rather than executing at any point during the regular continuous trading session. The investor specifies a limit price, and the order enters the closing auction along with all other closing orders, executing at the calculated closing price only if that price meets or betters the specified limit. If the closing price would be worse than the limit, the order does not execute at all.

This order type gives an investor a way to target the official closing price specifically, which matters for anyone whose trade needs to align with that reference point, such as funds that are benchmarked against the closing price or investors managing tax lots around a specific day's close, while still keeping some price protection in case the closing auction settles somewhere the investor is not willing to accept. It differs from a market-on-close order, which also targets the closing auction but has no price limit and will execute at whatever price the auction produces.

Exchanges impose cutoff times, generally a set number of minutes before the close, after which limit-on-close orders can no longer be submitted or canceled, so investors need to place them well ahead of the closing bell rather than waiting until the last moment. Because these orders feed directly into the closing auction, a large imbalance of limit-on-close and market-on-close orders on one side can itself influence where the closing price ends up settling.