What Is Bunching?

Bunching is the combining of multiple odd-lot or round-lot orders for the same security so that they can all be executed at the same time. All affected clients must agree to the bunching before the order is submitted.

Bunching also refers to a pattern that appears on a ticker tape when a series of same-security trades print consecutively, one after the other.

The Basics of Bunching

Most securities trade in a standard number of units. A round lot is usually 100 units (shares, contracts, etc.) of the asset or a number that's evenly divided by 100. An odd lot contains less than 100 units.

Often, bunching occurs on the floor of a securities exchange when traders and brokers roll up small or unusually sized trade orders into one larger order and then trade it in one single transaction.

Bunching can be financially advantageous for investors with orders for less than 100 shares of a particular security, who would otherwise be charged extra fees for the odd-lot order, sometimes called an odd-lot differential. Odd-lot orders are difficult to match, and so additional charges for them are common.