Not that I want to encourage odd-lots, but can someone specify exactly which SEC/NYSE/NASD rule is being violated prima facie simply by the entry of an odd-lot order? I say this because I believe there is no such general rule. I'm aware of the following facts:
1. NYSE, specifically, has some rules with regard to entering odd-lot orders because of some abuses that were made possible when Direct+ came along.
I don't remember the specifics, nor what the exact rule was, but I remember that IB complied by preventing odd-lot orders to open new positions from being sent _anywhere_. They were eventually covinced that this was specifically an NYSE restriction and that it had no bearing on the ECNs, at which time odd-lots were again allowed to be routed to the ECNs, regardless of current position.
2. Some time ago, ARCA started charging $0.03/share (yes, at least 10x the normal fee) for orders entered for odd-lots. Obviously, brokers that charge an all-in per-share rate cannot absorb this, and have reacted with various restrictions. Some were slow to notice the missing '0' in the rate schedule
3. ARCA and NYSE have rules that specifically prohibit unbundling/shredding/painting the tape with multiple odd-lot orders when a single, larger order would suffice. Assent has a rule prohibiting orders of less than 50 shares to open a new position, probably to improve compliance with this rule. It could also be that they simply do not want people to intentionally do such small trades (for commission reasons). It's unclear whether such a restriction is intended to (or can legally) apply to retail traders.
1. NYSE, specifically, has some rules with regard to entering odd-lot orders because of some abuses that were made possible when Direct+ came along.
I don't remember the specifics, nor what the exact rule was, but I remember that IB complied by preventing odd-lot orders to open new positions from being sent _anywhere_. They were eventually covinced that this was specifically an NYSE restriction and that it had no bearing on the ECNs, at which time odd-lots were again allowed to be routed to the ECNs, regardless of current position.
2. Some time ago, ARCA started charging $0.03/share (yes, at least 10x the normal fee) for orders entered for odd-lots. Obviously, brokers that charge an all-in per-share rate cannot absorb this, and have reacted with various restrictions. Some were slow to notice the missing '0' in the rate schedule
3. ARCA and NYSE have rules that specifically prohibit unbundling/shredding/painting the tape with multiple odd-lot orders when a single, larger order would suffice. Assent has a rule prohibiting orders of less than 50 shares to open a new position, probably to improve compliance with this rule. It could also be that they simply do not want people to intentionally do such small trades (for commission reasons). It's unclear whether such a restriction is intended to (or can legally) apply to retail traders.