Definition of Round Lot

A round Lot in the securities industry is the standard trading unit for securities. For common and preferred stock a round lot is 100 shares. For bonds, it is 5 bonds or $5,000 in par value..

Applying "Round Lot" to Securities Exams:

Stocks and bonds are quoted and trade in round lots. Bids and offers are displayed in round lots and multiples of round lots. For stock a round lot is 100 shares. $5,000 par value is a round lot for bonds. Believe it not many exams actually still test the concept of round lots and what constitutes good delivery as a result. Stock certificates must be delivered in denominations that are in round lots or in lots that easily add up to create round lots. Take a look at the following example:

A customer sells 200 shares of XYZ. The following certificates are considered good delivery:

  • One certificate for 200 shares
  • Two certificates for 100 shares
  • Two certificates for 60 shares and two certificates for 40 shares
  • Twenty certificates for 10 shares
  • The following is not good delivery:

  • Five certificates for 40 shares
  • One certificate for 130 shares
  • Certificates that cannot be easily added up to 100 shares are not good delivery. If the selling broker dealer delivers a certificate for a portion of the trade and the remaining shares will add up to one round lot or multiples of round lots, then the buying broker dealer must accept the partial delivery.

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    The Securities Institute of America, Inc

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