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 Says:
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:
All Or None Order - AON
Broker
Limit Order
Market Order
Order Splitting
Split Block Pricing |