Uneven lots are usually considered to be lots of stock that are sold with less than the usual number of shares included in the option. Sometimes referred to as an odd or broken lot, the uneven lot may contain less than one hundred shares of a given stock, or less than ten shares of thinly traded stock. An uneven lot does not necessarily include stock options that are less than desirable. Often, odd or broken lots simply reflect the fact that there are not a lot of shares currently available.
It is not unusual for brokers to charge a different commission structure for executing an order on broken or odd lots on behalf of a client. This is because the commission on an uneven lot is generally less than earned commission on a standard or round lot of shares of stock. Since the broker will provide the same level of effort to execute the order and would earn a smaller commission with the uneven lot, most brokerages apply a slightly higher percentage to the commission earned on each traded share. This slightly higher commission is normally referred to as a differential.
An uneven lot is often understood to be a good deal for the investor. In some cases, purchasing an uneven lot can allow the investor to begin building a solid interest in a stock that is highly desirable but rarely available on the open market. Rather than hoping for the acquisition of a round lot of this desirable stock, the investor purchases an odd lot of the stock each time one becomes available. Over time, the investor is able to accumulate enough shares to have a round lot within the portfolio. Once this goal is achieved, the investor may choose to sell the accumulated shares as a round lot, or hold onto the shares if they are continuing to perform well and enjoy the dividends.
While some brokers do not proactively notify clients of the availability of an uneven lot of stocks that may be of interest, many do choose to advise investors when a desirable lot comes on the market. While the broker may earn less commission even when a differential is applied, the good will that is invoked by assisting a client to secure stocks that he or she wishes to own is often considered worth the time and effort.