A maker or cancel (MOC) order is a specialized order type in financial markets. It is designed to enhance liquidity by ensuring that orders are added to the order book as maker orders. Unlike traditional orders that might immediately match with existing orders, known as taker orders, MOC orders will only execute if they can be placed on the order book without matching an existing order. If an MOC order would result in an immediate match, it is automatically canceled. This mechanism distinguishes traders who contribute liquidity from those who take liquidity, fostering a more balanced and efficient market environment.
MOC orders are beneficial for traders aiming to minimize transaction costs and act as liquidity providers. For example, traders implementing market-making strategies on cryptocurrency exchanges often use MOC orders to ensure their trades add liquidity to the market. By doing so, these traders can avoid higher taker fees associated with orders that consume liquidity and may even earn rebates for their role in providing liquidity. This strategic use of MOC orders can lead to more cost-effective trading and potentially higher profitability over time.
The primary benefits of using maker-or-cancel orders include reduced trading fees and the opportunity to earn rebates. By ensuring that orders contribute to liquidity, traders can avoid the higher fees typically charged for taker orders that remove liquidity from the market. Additionally, many exchanges offer incentives for liquidity providers, allowing traders who consistently use MOC orders to benefit financially beyond just reduced fees. This makes MOC orders an attractive option for active traders and institutions focused on long-term market strategies.