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.

    Be ready to ace your exam with our greenlight pass guarantee.

    Good Luck on your exam!

    The Securities Institute of America, Inc

    Preparing for an Exam?

    Receive 15% off all your Securities Exam Prep materials

    Please wait....

    Your Cart