What is ‘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.
Explaining ‘Tape Shredding’
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.
Further Reading
- Trade shredding: SRO-sponsored payment for order flow – jot.pm-research.com [PDF]
- Analysis Of Business Feasibility Of Cassava Chips and Cassava Tape, Financing and Marketing Strategies for Entrepreneurial Cassava Farmers in Jember Regency – repository.unej.ac.id [PDF]
- Equity trading and the allocation of market data revenue – papers.ssrn.com [PDF]
- Equity trading and the allocation of market data revenue – www.sciencedirect.com [PDF]
- A new perspective on infrastructure financing in Asia – www.sciencedirect.com [PDF]
- The real causes of the economic crisis? They're history – arizonacommonsense.com [PDF]
- Stability tests for alphas and betas over bull and bear market conditions – www.jstor.org [PDF]
- Finance And Accounting Outsourcing: Three Studies Related To The Ethical And Economic Dimensions Of Accounting Outsourcing – stars.library.ucf.edu [PDF]
