Definition
The term “kill” in finance refers to the cancellation of an order to trade a security, such as stocks or bonds. This can occur when an investor decides not to proceed with the transaction, or the order remains unfilled due to unfavourable market conditions. Once the order is killed, it is no longer active in the market.
Phonetic
The phonetics of the keyword “Kill” is: /kɪl/
Key Takeaways
- An instruction to terminate a trade is known as a kill command. This can happen for a number of reasons, including when the market swings against the trader’s position, when the trader places an order incorrectly, or when the trader simply changes their mind.
- In the context of electronic trading, when orders are placed and carried out by computer systems, kill directives are frequently employed.
- Kill orders can be issued via many different channels, including exchanges, broker-dealers, and online trading platforms.
Importance
The business/finance term “kill” is important because it represents a crucial decision-making moment for investors, traders, and business owners. In the world of trading and investment, a “kill” refers to the cancellation of an order, usually applied to the withdrawal of a purchase or sell order before it is executed. This term embodies the ability to exercise control and make informed decisions based on market trends, financial health, or even personal judgment. By exercising the option to “kill” an order, stakeholders can counter potential risks, limit losses, and maintain their strategic financial positions. Understanding and adeptly applying this term enables individuals and businesses to maneuver within the dynamic and often volatile financial markets, ensuring improved financial outcomes and stability.
Explanation
In the world of finance and business, the term “kill” refers to the decision made by a central authority (usually a policymaker, corporate executives, or financial institutions) to halt or cancel a specific financial transaction, generally securities, trades, or projects. While on the surface this may seem like a negative action, the purpose of exercising a “kill” is often strategically driven, with the ultimate objective of preventing potential losses, mitigating risks, or even safeguarding the overall financial stability of an investment or business venture. As financial markets and businesses continuously evolve and respond to new information, a “kill” can be a crucial step in managing investments and protecting stakeholders’ interests. The usage of “kill” varies in different contexts — for example, in the stock market, a trader may choose to “kill” an order due to a sudden change in market conditions or new information that indicates the likelihood of incurring a loss. By doing so, the trader avoids placing a trade that could result in unfavorable outcomes. On a larger scale, it can refer to an organization or government’s decision to cancel a project or investment that no longer aligns with financial goals, may cause reputational damage, or has become economically infeasible. In such instances, “killing” a project serves to refocus resources and energies on more viable ventures or policies, ensuring that capital is effectively allocated and the financial health of the involved parties is preserved.
Examples
In business and finance, the term “kill” is not directly used. However, it is often used informally to describe situations where projects or deals are ended or stopped. Here are three real-world examples related to this: 1. Product Discontinuation: In 2011, Cisco decided to ‘kill’ their Flip video camera business just two years after acquiring it for $590 million. The decision was made as smartphones were becoming more popular and their built-in cameras were becoming more powerful, significantly affecting the market for standalone handheld video cameras. 2. Merger Termination: In 2016, the proposed merger between pharmaceutical giants Pfizer and Allergan was ‘killed’ after the U.S. government introduced new rules to prevent the practice of corporate tax inversion. The $160 billion deal was terminated as it would no longer be financially viable, and both parties would have to look for other ways to optimize their business practices. 3. Government Intervention: In 2001, the U.S. Department of Justice effectively ‘killed’ Microsoft’s proposed acquisition of Intuit, the creators of Quicken, one of the leading personal finance software programs at the time. The government intervention was due to antitrust concerns, as the acquisition would have created a monopoly in the market for personal finance software.
Frequently Asked Questions(FAQ)
What is the term “Kill” in finance and business context?
Why would someone want to “kill” an order or contract?
What types of orders can be “killed”?
Is there a time limit within which an order or contract can be killed?
How do I “kill” an order or contract?
Are there any consequences for killing an order or contract?
Can I reverse the decision to kill an order or contract?
Are there any alternatives to killing an order or contract?
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Sources for More Information
