Volume Continues to Vanish, Increasing Volatility and Another Potential Flash Crash

“It is time to review some ancient stock market jargon, in order to understand the principle of the disappearing market volume.

A “lot” is 100 shares of stock.  In the era of specialists controlling trading on the floor of the NYSE, trading was done much more easily in “round lots”, meaning multiples of 100 shares which the specialist could apportion out to other traders, much like how an air traffic controller directs multiple inbound and outbound aircraft in the same airspace.  In the days before computers and calculators, putting transactions in round lots made things easier; figuring out how much money had to change hands for a stock at $93/share is much easier if the quantity is 100 shares.  That’s easy math: $9300.  It gets harder if the multiple is different than 100.

“Odd lots” means anything other than a round lot, and in the old days, odd lot orders would go to the “odd lot desk” in order to get aggregated with others into round lots, or otherwise married up with a corresponding opposing order or acceptance.

In the days of paper order slips, order ledgers, and share certificate clerks running paper back and forth across lower Manhattan, these were important functions….”

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