Modernizing Odd Lot Trading

49 Pages Posted: 25 May 2021 Last revised: 8 Jun 2021

See all articles by Robert P. Bartlett

Robert P. Bartlett

University of California, Berkeley - School of Law; University of California, Berkeley - Berkeley Center for Law, Business and the Economy

Date Written: May 19, 2021


Traditional odd lot trades (i.e., trades involving fewer than 100 shares) now comprise over half of all equity trades on U.S. exchanges. Under Regulation National Market System, however, these trades are excluded from a market center’s trade execution statistics. In addition, while brokers are required to consider odd lot quotes as part of their duty of best execution, odd lot quotes are formally excluded from the calculation of the national best bid and offer. This Article, written for a symposium on the Future of Securities Regulation at Columbia Law School, examines whether these regulatory exclusions for odd lot trades and quotes increase trade execution costs for retail trades filled in non-exchange venues. Across more than 3 billion trades during 2020, odd lot trades filled in non-exchange venues received 10% less price improvement than non-odd lot trades. In addition, using order book data from Nasdaq, examination of a sample of retail, non-exchange trades in two popular retail stocks — Amazon and GameStop — on January 27, 2021 reveals that 31-46% of odd lot trades would have received better pricing had the venue filled the order at the Nasdaq odd lot quote. These results suggest that the differential treatment of odd lots and round lots in the regulation of U.S. market structure may impair the execution quality of marketable odd lot orders from retail traders.

Keywords: Odd Lots, Retail Trading, Internalization, Price Improvement, National Market System

JEL Classification: G10, G15, G18, G23, G28, K22

Suggested Citation

Bartlett, Robert P., Modernizing Odd Lot Trading (May 19, 2021). Available at SSRN: or

Robert P. Bartlett (Contact Author)

University of California, Berkeley - School of Law ( email )

215 Boalt Hall
Berkeley, CA 94720-7200
United States
510-642-6646 (Phone)

University of California, Berkeley - Berkeley Center for Law, Business and the Economy

UC Berkeley School of Law
Berkeley, CA 94720

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