NYSE Rule 124 (C)

Updated 4/9/2010: NYSE ARCA told me today that the fill was a legal fill for the reasons summarized in NYSE ARCA Responds to My Inquiry About Odd Lot Fills

I have had some interest in the NYSE rule on odd lots orders. My link in the prior post takes the reader to rule 123 rather than 124 and I can not get it to work properly. For anyone interested, just navigate to Rule 124 in the left pane. For convenience I have copied Rule 124 (C) in its entirety below. I only enter odd lot market orders for securities where there is a lot of volume and frequent round lot trading within a narrow bid/ask spread. If Rule 124 had been followed on STDPRB the other day, I believe that my order should have been filled at $18.49 which is the ask price that round lots were then trading. Instead, as readers can see from Fidelity's response to me, they believe to the contrary, that my odd lot market order has to be matched with another odd lot for sell and that is the market price for my odd lot purchase order. I thought that I might kick the problem upstairs at Fidelity by sending them a recent email referring to this NYSE RULE:

"(c) Market and Marketable Limit Orders.— Odd-lot market orders and odd-lot limit orders that are marketable upon receipt by the System (hereinafter collectively referred to as "marketable odd-lot orders") shall begin automatic execution only following the first round-lot transaction on the Exchange in the subject security. Marketable odd-lot orders will be executed in time priority of receipt by the System at the price of the next round-lot transaction on the Exchange in the subject security following receipt of the orders by the System, subject to the following:

(i) Marketable odd-lot buy orders and odd-lot sell orders will be executed at the price of such round-lot transaction on the Exchange with the DMM as the contra side to the extent that such odd-lot orders total an equal number of shares bought and sold, except that a marketable odd-lot order that would otherwise receive a partial execution shall be executed in full.

(ii) Marketable odd-lot orders that do not receive an execution pursuant to paragraph (c)(i), shall be executed in time priority of receipt by the System at the price of the National best bid (in the case of marketable odd-lot orders to sell), or the National best offer (in the case of marketable odd-lot orders to buy), with the DMM as the contra party to all such executions.

(iii) The total number of additional shares of marketable odd-lot orders executed at the price of the NBBO as set forth in paragraph (c)(ii), shall not exceed the number of shares of the lesser of either the last round-lot Exchange transaction or the National best bid (in the case of marketable odd-lot orders to sell), or the National best offer (in the case of marketable odd-lot orders to buy), except that a marketable odd-lot order that would otherwise receive a partial execution shall be executed in full.

(iv) Marketable odd-lot orders not executed pursuant to paragraphs (c)(i), (ii), (iii) or (v) below shall be executed, in time priority order, following subsequent round-lot transactions on the Exchange, subject to the same procedures stated in paragraph (c)(i), (ii), (iii) and (v).

(v) Any marketable odd-lot order not executed within 30 seconds of receipt by the System pursuant to paragraphs (c)(i), (ii), (iii) or (iv) above shall be executed, in the case of an order to buy, at the price of the National best offer after 30 seconds, and in the case of an order to sell, at the price of the National best bid after 30 seconds, subject to the volume restrictions stated in paragraph (c)(iii).

(vi) Odd-lot orders entered before the opening transaction of the subject security that are eligible to receive an execution pursuant to paragraph (b) above, based on the opening price, shall be executed at the price of the opening transaction.

(vii) Odd-lot orders entered prior to and during a halt in trading on the Exchange in the subject security that are eligible to receive an execution pursuant to paragraph (b) above based on the reopening price, shall be executed at the price of the re-opening transaction.

(viii) Marketable odd-lot orders that remain unexecuted prior to the close of trading shall be executed in time priority of receipt at the price of the closing transaction to the extent that such marketable odd-lot orders total an equal number of shares bought and sold. The total number of additional shares of marketable odd-lot orders executed at the price of the closing transaction shall not exceed the number of shares of such closing transaction, except that a marketable odd lot order which would otherwise receive a partial execution shall be executed in full."

So admittedly, this reads like the IRS code. My odd lot order was filled at 18.85, the "best" price available for the ask side for an odd lot order and 36 cents above the then existing market price for round lots.