How are Cover Orders (CO) affected by NSE’s self-trade prevention mechanism?

Back in 2015, NSE came up with the self-trade mechanism for traders who have both, buy and sell orders open for a particular scrip at the same price. You can check out this NSE document for more information.

In the case of cover orders, where both the legs of the order are sent simultaneously, the position will be left open if one of the legs is rejected owing to a self-trade prevention check.

Let’s understand this with an example. You place a Buy CO at market price (Last Traded Price is 200) with a Stop Loss of 199. If, before the execution of the first order, the share price comes down to 199, then the Stop Loss order will get triggered and sent to Exchange. Thus, both buy and sell legs are open on the Exchange, which may lead to rejection of one of the legs.