Round lots

mun35

Newbie
4 0
Hi,

How come most stock exchanges trade in round lots? NYSE's round lots are typically 100 shares; Hong Kong's are typically 1000 shares etc. What are the benefits of encouraging trading in round lots? With electronic trading, it's quite effortless for brokers to place even a small order. So is it more a historical reason?
 

chibiks

Member
52 0
Hi,

How come most stock exchanges trade in round lots? NYSE's round lots are typically 100 shares; Hong Kong's are typically 1000 shares etc. What are the benefits of encouraging trading in round lots? With electronic trading, it's quite effortless for brokers to place even a small order. So is it more a historical reason?
Please I am interested in the answer to this question as well. Anybody know the answer?
 

ChocolateDigestive

Experienced member
1,153 280
I think its just easy to match buyers and sellers with round lots. I trade NYSE stocks so you have all the ECN's transacting electronically but you also have floor brokers who match trades on their hand held computers. Maybe it's to do with the floor brokers, the last thing you need is someone wanting to buy 1589 shares of something as you would probably only be able to match up the 1500 leaving 89 on the handheld. Sure the ECN's can handle any size order but floor brokers would be harder.

that's the only thing I can think of.
 

hgh

Active member
133 1
interesting question, I also want to get the answer. Have a try on google, but most answers just give the definition of it. From my view, it's more historical reason related.
 

jacknapier

Active member
157 2
I think its just easy to match buyers and sellers with round lots.
That's been my experience. Sometimes I'll bid an extra 25 shares, just because it doesn't affect my r/r and it's a little extra money if it goes my way, but the problem is that my order sometimes gets stuck in trading limbo waiting for the remaining 25 to fill.
 

Hittfeld

Well-known member
437 12
Anybody ever thought of the companion of stocks: options on this very stock? You can buy stock options, which give you the right to ask for delivery of the underlying stock. The option trade size is CONTRACT, where one contract gives you (normally) the right / obligation to receive / deliver 100 shares. There is no way to trade options for 33 shares. If you are an options trader and require (according to your greeks) to adjust your position size with another 33 shares, you trade the shares, not 1/3rd contract. This are oddlot trades.