Overview

Odd lots are orders to buy or sell shares of a stock that don't match standard trading units called "board lots." Board lots are typically 100, 500, or 1,000 shares, depending on the stock's price. They help simplify trading and make it easier for brokers to match buyers and sellers. Odd lots are any quantity of shares less than a board lot. For example, if the board lot for a stock is 100 shares, an order for 30 shares would be an odd lot.  

Sometimes, an order includes both a board lot and an odd lot. For example, an order for 530 shares where the board lot is 500 shares would be a mixed lot. This type of order is treated as two separate orders: one for the board lot (500 shares) and one for the odd lot (30 shares).

The number of shares in a board lot depends on the price of the stock. Here's a general breakdown:

How are odd lots traded?

Most Canadian marketplaces have odd lot trading programs where market makers handle these orders. Market makers are financial institutions that provide liquidity to the market by buying and selling securities.

How are odd lot trades different from board lot trades?

There are a few key differences between trading odd lots and board lots:

1. Trading venues
   Odd lots and board lots are actually traded in different places. Think of stock trading as happening in various "books." Each "book" is a sophisticated computer system that tracks and matches buy and sell orders. 
   • Board lots: These are traded on the Continuous Order Book (CLOB), sometimes called the Central Limit Order Book. The CLOB is a real-time market where orders are matched directly with each other. This means buyers and sellers can interact directly, rather than relying on a middleman. The CLOB also provides transparency, allowing users to see the details of current orders (prices, sizes, etc.) in real-time. 
   • Odd lots: These are handled through the Odd Lot Book. In Canada, this book has a unique feature: it automatically guarantees that your odd lot order will be filled at the best possible price (the CBBO). 
2. Visibility in historical data
   Another difference lies in how these trades are recorded.
   • Board lots: Trades involving board lots are typically the ones that show up in a stock's historical price data. This is what you usually see when you look at charts or historical prices.
   • Odd lots: Odd lot trades might not be captured in this historical data. This can sometimes cause confusion if you see a price for your odd lot trade that falls outside the reported high or low for the day. This discrepancy happens because the odd lot trade might not be recorded as an official price if there were no corresponding board lot trades at that price.
3. Handling at market open
   The two types of orders are also handled differently at the start of the trading day.
   • Board lots: For stocks on the Toronto Stock Exchange (TSX), there's a system that determines a Calculated Opening Price (COP) before the market officially opens. Board lot orders placed at or above this price are filled immediately at the opening bell.
   • Odd lots: Odd lot orders are processed a bit later. They don't get filled at the opening bell. Instead, they wait until the market has established its initial bid and offer prices, forming the CBBO, and then they are filled.

How are odd lot prices determined?

Odd lot orders are filled at the Protected Canadian Best Bid and Offer (CBBO). The CBBO ensures you get the best possible price by considering the best bid and offer prices across multiple Canadian marketplaces.

For example, if ABC is offered at $0.95 a share on the TSX and $0.94 a share on Nasdaq Canada, the Canadian Best Offer for it is $0.94. If ABC is bid at $0.92 on the TSX and $0.91 on Cboe Canada, the Canadian Best Bid is $0.92. So in this example, the CBBO would be $0.92-$0.94. If you placed a limit buy order at $0.95 for seven shares, your order would be filled at $0.94, because that was the CBO.

Frequently asked questions