Round Lot Basis vs. Odd Lot Distributions… anybody??

Haven’t seen this referred to in the curriculum anywhere. Where did you see this? Fair Dealing (i.e. - trade allocation) in Ethics, or something in the Equity section?

ethics - fair dealing… damn dude

mumu… I think this refers to the pro-rata distributions on IPO’s right? A round lot is 100 shares versus odd which is any amount. Generally, IPO’s may only be distributed as round lots so I guess depending on the question it refers to properly apportioning IPO’s.

100 shares= round lot 87 shares= odd lot Only non-institutional investors buy odd lots.

Recommended is pro-rata but can use any fair method that is disclosed to clients.

awesome…thanks gentlemen…

Google threw up a link to the CFA Standards of Practice Handbook, under Standard III(b) (Fair Dealing) “If the issue is oversubscribed, then the issue should be prorated to all subscribers. This action should be taken on a round-lot basis to avoid odd-lot distributions.” I doubt this will be an exam question though - never seen it in the CFAI text (it rang the “Fair Dealing” bell because that, and the basic introduction to equity trading are the only possible places we would talk about allocating odd lots!)

Ooops… spoke too soon. Just realized the CFA standards of practice handbook, is actually chapter 2 (Guidance for standards) in the Ethics CFAI book…