Market-On-Close And Limit-On-Close Orders

Most exchanges end the regular trading day with a closing auction, a single batch process that collects buy and sell interest and computes one official closing price for the whole session, rather than trading continuously order-by-order the way the rest of the day works. A market-on-close (MOC) order is an instruction to participate in that auction at whatever price it settles on, with no price limit — it is guaranteed to execute (subject to exchange rules on submission deadlines), but the trader accepts whatever the auction determines. A limit-on-close (LOC) order participates in the same auction but only executes if the auction price is at or better than a specified limit, trading off the guarantee of execution for price protection.

These order types matter because a large share of daily trading volume, often a fifth or more on a typical US stock, executes in the closing auction alone, since index funds, benchmarked strategies, and anyone who wants to trade "at the official close" all route there deliberately. A fund that is benchmarked against a closing-price index, for instance, effectively must use MOC or LOC orders to minimize tracking error against that benchmark, rather than trading throughout the day and hoping to average out close to the eventual close.

Both order types must typically be submitted or canceled before a strict cutoff time ahead of the actual close, and exchanges publish running auction imbalance data in the minutes before that cutoff so market participants can see, and react to, the current buy/sell imbalance before submitting final orders.