How will NSE’s self-trade prevention mechanism affect Cover Orders?

In 2015, the NSE introduced a Self-Trade Prevention (STP) mechanism to prevent clients from unintentionally executing trades against their own orders in the same scrip. If an active order (a newly placed order intended to match an existing one) is likely to match a passive order (an existing unmatched order) from the same client, the new active order will be automatically canceled by the exchange.

Example: If you already have an order at the best bid or offer and place another order in the same scrip that could potentially match your existing order, the exchange will cancel the new order to prevent a self-trade.

This mechanism applies to all types of orders including Limit, Market, Stop Loss, and Stop Loss-Market orders and Day and IOC (Immediate or Cancel) order.

NSE Link: https://www.nseindia.com/trade/pan-based-self-trade-prevention-check-mechanisms-faqs