What is an Odd Lot? A Comprehensive Guide to Its Legal Definition
Definition & Meaning
An odd lot refers to a quantity of a security that is less than the standard trading unit for that security. In the stock market, this typically means any amount of shares that is fewer than 100. Odd lots are often subject to higher commission fees from brokerages compared to round lots, which are the standard units of trading. This term is also known as a broken lot or uneven lot and is the opposite of a round lot.
Legal Use & context
Odd lots are primarily relevant in the context of securities trading and investment. They may come into play in various legal areas, including financial regulation and securities law. Investors should be aware of the implications of trading odd lots, especially regarding potential higher fees charged by brokerages. Users can manage their transactions using legal forms and templates provided by platforms like US Legal Forms, which can help simplify the process.
Real-world examples
Here are a couple of examples of abatement:
For instance, if an investor wants to purchase 75 shares of a stock, this transaction would be considered an odd lot. As a result, the investor might incur higher brokerage fees compared to purchasing a round lot of 100 shares.
(Hypothetical example): A user decides to sell 50 shares of a company. Since this is an odd lot, their brokerage may charge a higher commission than if they were selling 100 shares.