Tape Shredding

AAA

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.

INVESTOPEDIA EXPLAINS '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. Limit Order

    An order placed with a brokerage to buy or sell a set number ...
  2. Market Order

    An order that an investor makes through a broker or brokerage ...
  3. Order Splitting

    When brokers split up larger orders to qualify them for the Small ...
  4. Broker

    1. An individual or firm that charges a fee or commission for ...
  5. Split Block Pricing

    The act of dividing a large order of financial securities into ...
  6. All Or None - AON

    A condition used on a buy or sell order to instruct the broker ...
Related Articles
  1. Principal Trading and Agency Trading
    Investing Basics

    Principal Trading and Agency Trading

  2. 4 Dishonest Broker Tactics And How To ...
    Personal Finance

    4 Dishonest Broker Tactics And How To ...

  3. The Basics Of Trading A Stock
    Active Trading Fundamentals

    The Basics Of Trading A Stock

  4. The NASDAQ Pre-Market: What You Need ...
    Investing Basics

    The NASDAQ Pre-Market: What You Need ...

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center