This thread on stocks nudged me to ask this question. What hitch(es) are there in selling “odd lots” of stocks, which I understand is a quantity that isn’t a multiple of 100?
Some relatives are inheriting from their uncle, whose estate is mainly in stocks. Some of them want to have the stocks divided by the number of heirs and inherit the stocks directly, because they think he had good judgment in investments, and maybe there’s an emotional component here also.
Others think it OK for the executor to cash in all the stocks and divide up the money, and those who wish can then buy per the list of stocks Uncle used to have.
So are there relatively higher commissions, more delay, ???, in inheriting 1/7 of a lot and selling it later? (Not to mention the nuisance value to the executor of handling the fractional shares)
And what is the term for a non-odd lot?
You can sell odd lots quite easily. Most online stock brokers make no difference between odd and round lots.
What he said.
If you are dealing with stock certificates, you would have to send them to the broker or registry agent rather than just go online at Scottrade. But they won’t charge you a crazy commission.
In the case you described, I think that the executor has to go to the registry agent and get the certificates re-issued in the appropriate amounts for each person in the inheritance. I doubt that would be left up to you.
Odd lots are mostly a relic of the Good Old Days, when only a commissioned broker could sell stocks, and the brokers could therefore set their fees arbitrarily high. The standard fee was based on the transfer of lots in multiples of 100. An odd lot took a bit more work, but the fee was disproportionally more, often enough to eliminate any gain in the actual price of the stock.
As stated, those days are gone. Discount brokers and electronic systems make fractional lots no more expensive to sell than any others.
I work for a discount online broker and with very rare exceptions, stocks can be bought and sold in odd lots. This is very common.
I used to invest through a discount broker and not only was I buying odd lots (normally no more than 1 or 2 shares) but the shares would be fractional to three decimal places. What would happen is that I’d set up an order to buy, say, $50.00 worth of a stock and the trade would happen to give me exactly $50.00 worth of stock at whatever the price was. So one month I might buy 2.3729 shares or something like that. Of course, that wasn’t live trading.