Johnson's Maureen O'Hara tells Traders Magazine to keep an eye on "odd lot" trading

10/14/2011 3:15:00 PM

Currently not reported to the consolidated tape, odd lots (or trades under 100 shares) have grown to possibly 20% of market volume.  Time to report to the tape?  O'Hara et al. say 'perhaps'

Maureen O'Hara, Johnson professor of finance, recently told Traders Magazine* that odd lots—which are not reported to the consolidated tape—have grown as a percentage of shares traded in recent years, and could now make up as much as 20 percent of market volume. 

In a recent paper by O’Hara, together with Chen Yao and Mao Ye of the University of Illinois, the researchers estimated that executed orders of fewer than 100 shares have grown from about 2.25 percent of total volume at the beginning 2008 to about 4 percent of volume at the end of 2009. In the past two years, they have grown even more.

Experts in the industry say it is very difficult to know how much of current trading comes from odd lots, but some estimates run as high as 20 percent.  "The interesting thing about odd lots is they used to be sort of a backwater," O’Hara said in an interview with Traders Magazine. "Odd lots now are actually being used via a very different clientele of people."  MORE

*Traders Magazine covers the entire trading process, including equities and options, major trends, financial industry news, executive profiles and the technological developments that keep Wall Street running. Read by C-Level Executives, Senior Management, Head Traders, Managing Directors, Partners and Portfolio Managers, Traders Magazine directly reaches the purchasing decision makers.TRADERS MAGAZINE covers the business of trading with a heavy emphasis on the buyside and sellside.

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