Disclosed Quantity

Disclosed quantity is an order feature on stock exchanges that allows investors to show only a portion of their total order quantity to the market while executing the full order over time. It is used by large investors to prevent their trading intentions from moving the market against them.

What Is Disclosed Quantity?

When an institutional investor or large trader wants to buy or sell a large block of shares, displaying the full order size in the order book can:
– Signal demand/supply to other market participants
– Allow counter-traders to front-run the order
– Move the price adversely before the full order is executed

With disclosed quantity, the investor enters the full order but shows only a fraction (the disclosed quantity) to the market at a time. When that quantity is filled, the next tranche is automatically revealed.

Example: An investor wants to sell 1,00,000 shares. They set disclosed quantity at 10,000. The order book shows only 10,000 shares available. As each 10,000 block is sold, the next 10,000 appears automatically, until all 1,00,000 are sold.

SEBI/Exchange Rules on Disclosed Quantity

– Minimum disclosed quantity is 10% of the total order quantity (or Rs 5 lakh worth of shares, whichever is lower) for equity on NSE and BSE
– Available for equity, F&O, and currency segments
– Also called “iceberg orders” in international markets

Who Uses Disclosed Quantity Orders?

– Mutual funds and institutional investors exiting large positions
– Promoters and large shareholders offloading shares over time
– Algo trading strategies breaking large orders into smaller tranches

Practical Example

A mutual fund wants to sell Rs 50 crore worth of shares in a mid-cap stock to avoid crashing the price. It places a sell order with disclosed quantity set at 10% of total. The order book shows only Rs 5 crore worth of shares available at a time, creating less panic in the market. The full sale is completed over a few hours.

Key Takeaways

– Disclosed quantity allows large investors to show only part of their order to the market at a time
– Prevents adverse price movement from revealing full intent to buy or sell large blocks
– Also known as iceberg orders; the hidden portion is the bulk, the visible portion is the “tip”
– NSE/BSE require minimum 10% of order quantity to be disclosed
– Essential tool for institutional investors managing market impact in thinly traded stocks