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Definition Of Tape Shredding:


Whena broker divides an order forsecurities into a number of smaller orders.
For certain securities, smaller orders can be easier tofill, so brokers have the ability to tape shred whenthey believe that doing so will speed up the rate at which the order is filled.Allowing tape shredding to happen also opens the doors for unscrupulous brokers to split alarge 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 couldhaveserious consequences.

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