The markup that is charged on odd-lot purchases or the markdown that is taken out on odd-lot sales as a way to compensate the brokerage firm (or broker) or specialists for dealing in transactions of non-standard size (odd lot rather than round lot). By definition, an odd lot consists of any number of securities less than 100. In such a case, the extra charge or deduction (odd lot differential) is added/ applied to the so-called round-lot price. For a purchaser, the extra charge is added to the price, while for a seller, a markdown amount is deducted from the price.
See an example (odd-lot differential-practical example).
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