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. Broad Tape

    A modern version of the ticker tape produced by the Dow Jones ...
  2. Tape Reading

    An old investing technique used by day traders to analyze the ...
  3. Fighting The Tape

    The action of placing a trade or trades that go against the ticker ...
  4. Consolidated Tape

    An electronic program that provides continuous, real-time data ...
  5. Digits Deleted

    A designation on an exchange's ticker tape that refers to the ...
  6. Deck

    The number of open orders that a broker is working with at any ...
Related Articles
  1. Investing Basics

    Understanding Order Execution

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

    Types of Securities Orders

    Securities Orders
  3. Professionals

    TAPE RECORDING EMPLOYEES

    Tape Recording Employees Certain firms may be subject to special supervision requirements if a significant amount of its registered agents came from a firm or firms that have been disciplined ...
  4. Options & Futures

    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 ...
  5. Professionals

    Priority Of Exchange Orders

    Orders that are routed to the trading post for execution are prioritized according to price and time. If the price of more than one order is the same, orders will be filled as follows: Priority: ...
  6. Brokers

    Explaining Market Orders

    A market order is the most common order used to purchase a financial security.
  7. Investing

    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.
  8. Professionals

    Crossing Stock

    A floor broker from time to time may get an order from both a buyer and a seller in the same security. The floor broker may be allowed to pair off or “cross” the orders and execute ...
  9. 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 ...
  10. Professionals

    Order Types

    NASAA Series 65: Section 17 Order Types. In this section market order, limit order, stop order and stop limit order.
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. 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 >>
  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 you know if a trade placed to a broker is confirmed?

    Learn how to check if trades placed with brokers online or over the telephone have been filled and confirmed. Explore different ... Read Answer >>
  6. 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 >>
Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  4. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  5. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  6. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
Trading Center