Order Splitting

Order splitting is when stock brokers split up larger orders to qualify them for the Small Order Execution System (SOES) and, therefore, have them automatically executed. Order splitting is more likely to occur when market depth and trading activity is lower than usual.

SOES is for individual traders with orders less than or equal to 1,000 shares. SOES enables these investors to gain the same access to orders and execution as larger traders. It requires market makers to accept SOES orders that match their advertised bid and ask prices.

The practice of order splitting is prohibited on the Nasdaq, although SOES is no longer necessary as advances in technology have made it possible for individual traders to conduct rapid, large trades on par with institutional traders without the system.