233
offer quotations with—say—a 10-share unit of trading; it
would, for example, be very misleading to quote a final bid and
offer for a stock as 9g9—99l4%, when 1,000 shares were being
offered at 14 and only—say—20 shares bid for at 99. The
adoption of the 100-share trading unit on the New York Stock
Exchange today is in consequence not simply a matter of
theoretical preference, but a practical and unavoidable necessity.
Yet at a market value of $100 per share, $10,000 would be
needed to purchase 100 shares of stock outright, or $2,500 at
least for their purchase on credit. It is apparent that the pres-
ent 100-share trading unit, were it not supplemented by other
arrangements suited to the needs and requirements of the small
investor, would deprive him of many facilities and services
which the Stock Exchange daily renders the larger investor.
THE ODD-LOT BUSINESS
The Odd-Lot System.—Accordingly, a system having for
its purpose the making of a market in less than 100-share lots
of stock for the wide investing public whose purchases and
sales occur in such amounts, has grown up in the Exchange.
Certain of its members known as “odd-lot dealers” purchase
odd lots of stock and later sell them out in 100-share lots, or
sell odd lots which they obtain by purchasing 100-share lots
and splitting them up into the smaller desired denominations.
Sometimes, instead of buying 100 shares it proves more desir-
able to borrow that amount in the manner previously described
in the instance of short sales;* but this practice amounts to
about the same thing. Any member of the Stock Exchange is,
of course, entirely at liberty to take up this work of dealing in
odd lots, as well as any other particular sort of business trans-
acted on the floor. But in practice, although a few specialists
still do an odd-lot business in the particular stocks at their
posts, the odd-lot business is today carried on almost entirely
by what are known as the “odd-lot houses.”
Evolution of the Odd-Lot House.— These odd-lot houses
have developed over the past half-century. When in the Civil
"See Chapter VII, p. 187.
