Tape Shredding

DEFINITION of 'Tape Shredding'

When a broker divides an order for securities into a number of smaller orders. For certain securities, smaller orders can be easier to fill, so brokers have the ability to tape shred when they believe that doing so will speed up the rate at which the order is filled.

BREAKING DOWN 'Tape Shredding'

Allowing tape shredding to happen also opens the doors for unscrupulous brokers to split a large order into many small orders for the sake of generating extra commission, as brokers are compensated for each order they fill.

However, various self-regulatory organizations and stock exchanges have limited tape shredding to only apply for order execution purposes. The use of tape shredding for other reasons could have serious consequences.

RELATED TERMS
  1. Fighting The Tape

    The action of placing a trade or trades that go against the ticker ...
  2. Deck

    The number of open orders that a broker is working with at any ...
  3. Ticker Tape

    A computerized device that relays financial information to investors ...
  4. Exchange Distribution

    A type of trade made on the floor of a securities exchange in ...
  5. Tape Is Late

    A situation on the trading floor where trading volume is so heavy ...
  6. Order

    An investor's instructions to a broker or brokerage firm to purchase ...
Related Articles
  1. Markets

    Understanding Order Execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  2. Trading

    Introduction To Order Types: Market Orders

    Note: Use a market order to guarantee a fill. A market order is the fastest and most reliable way to get in out of a trade. A market order is appropriate if getting filled is more important than ...
  3. Markets

    Explaining Market Orders

    A market order is the most common order used to purchase a financial security.
  4. Trading

    How To Start Trading: Order Types

    The types of orders you use can have a large effect on your trading performance, so understanding the different order types is important to your success.
  5. Investing

    Brokers and Online Trading: Accounts And Orders

    Types of Accounts Depending on what type of securities you hold, there are four major choices you have when opening an account: Cash Account: The basic account where you deposit cash to buy ...
  6. Trading

    Online Stock Traders

    Online stock traders place buy/sell orders for financial securities and/or currencies with the use of a brokerage's Internet-based proprietary trading platforms. The use of online trading ...
  7. Trading

    Introduction To Order Types: Duration

    In addition to market, limit, stop and conditional orders, traders can also specify for how long they wish the order to be in effect; that is, how long the order will remain in the market until ...
  8. Investing

    Understanding The Ticker Tape

    We explain the meaning and use of that reel of symbols whizzing across your TV or computer screen.
  9. Trading

    The Basics Of Trading A Stock

    Taking control of your portfolio means knowing what orders to use when buying or selling stocks.
  10. Trading

    Intermediate Guide To MetaTrader 4 - Order Types

    Traders have the option of placing different order types using the MT4 platform. Market OrderA market order is the most basic type of trade order and is used to buy or sell a security at the ...
RELATED FAQS
  1. How long does it take a broker to confirm a trade after it is placed?

    Learn about placing trades with a broker and the amount of time required to received confirmation of different types of orders, ... Read Answer >>
  2. What's the difference between a market order and a limit order?

    Buy and sell trades with market orders at the present stock price and execute limit orders if the stock price falls within ... Read Answer >>
  3. How do I place an order to buy or sell shares?

    Read a brief overview of how to open a brokerage account, how to buy and sell stock, and the different kinds of trade orders ... Read Answer >>
  4. How can I use a buy limit order to buy a stock?

    Learn how a buy limit order is used by an investor who wants to buy a stock at a certain price, and understand how limit ... Read Answer >>
  5. How do I place a limit order online?

    Learn how a limit order is placed, the types of stocks it is most useful for and the specifications placed with it to suit ... Read Answer >>
  6. What are the regulations surrounding limit order protection?

    Learn about the order protection rule enacted by the Securities and Exchange Commission (SEC) to ensure investors receive ... Read Answer >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center