Kill

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 Once the order is killed, it is no longer active in the market.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?

In finance and business, the term “Kill” usually refers to the cancellation or termination of an order or contract before it has been executed or fulfilled.

Why would someone want to “kill” an order or contract?

There can be various reasons, such as a change in market conditions, errors in pricing or quantities, or the realization that the transaction is no longer needed or desired.

What types of orders can be “killed”?

Most common orders include buy and sell orders in trading stocks, futures, and options. However, it can also be applied to other types of contracts and agreements in a business context.

Is there a time limit within which an order or contract can be killed?

The ability to kill an order or a contract varies depending on the terms and conditions agreed upon by the involved parties. In the case of trading, typically, an order can be killed if it has not yet been executed.

How do I “kill” an order or contract?

If you are trading stocks, futures, or options, you can typically request a cancellation of your order through your broker or trading platform. In a general business setting, you would need to refer to the specific terms of the agreement, follow the defined cancellation procedure, and communicate with the involved parties about the cancellation.

Are there any consequences for killing an order or contract?

In trading, there are usually no major consequences for canceling an order before it has been executed, unless specified in the terms of the trading platform. In a business context, there may be consequences such as penalties, fees, or potential legal issues, depending on the terms of the agreement and the reasons for cancellation.

Can I reverse the decision to kill an order or contract?

If the order or contract has not yet been officially killed or canceled, you can attempt to reverse the decision by either contacting your broker or the involved parties. However, once the order or contract has been officially killed, you cannot reverse the decision and will need to create a new order or agreement.

Are there any alternatives to killing an order or contract?

In trading, you can use order types such as “Buy Stop,” “Sell Stop,” or “OCO (One Cancels the Other)” orders to manage your trading strategies without killing orders. In a business context, you may be able to negotiate amendments or changes to the contract rather than canceling it altogether.

Table of Contents

Definition

Phonetic

Key Takeaways

Importance

Explanation

Examples

Frequently Asked Questions(FAQ)

Related Finance Terms

Sources for More Information

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