A Limit on Close (LOC) order will execute at the closing price if the closing price is at or better than the submitted limit price. Otherwise the order will be cancelled.

LOC orders are natively supported for equities traded on NYSE and AMEX and SuperMontage. All LOC orders must be received at Nasdaq by 15:59:30 and will be executed between 15:59:30 and 16:00. Orders for Nasdaq securities must be routed direct to the exchange.

Symbol XYZ shows an asking price of 24.50. You want to buy 100 shares, but you don’t want to pay more than 24.25. You decide that the closing price for this stock has historically proven to be the best price of the day and think you’ll have a better chance of filling a limit order if you submit it at the market’s close. You click the Ask price to create a BUY order and select LOC in the Type field. In the Lmt. Price field, you enter your limit price of 24.25. Submit the order, which will be submitted at the close. If the closing price is not at or better than your submitted limit price, the order is cancelled.

Summary of NYSE rules for entering/canceling/modifying limit-on-close (LOC) orders

• All LOC orders must be received at NYSE by 3:40 pm unless entered to offset a published imbalance.
  
  
• After 3:40 pm, you may only enter LOC orders on the contra side of the last imbalance published, regardless of size.

  Example: If the 3:50 P.M. published imbalance reverses the prior published imbalance, only orders that offset the 3:50 imbalance publication will be accepted.

• Exception: On expiration days, you cannot enter LOC orders after 3:40 PM to establish or liquidate positions related to a strategy involving derivative instruments, even if these orders would offset a published imbalance.

New York Stock Exchange (NYSE) rules also prohibit the cancellation or reduction in size of any limit-on-close (LOC) order after 3:40 P.M. Eastern Time.