Order Splitting

“Order splitting” is the practice of splitting a huge trade order into smaller orders so they can be executed automatically.

If an individual investor wants to trade 1,000 shares or fewer of a NASDAQ-listed security, they’re eligible for the SOES (Small Order Execution System), which means their trades are automatically executed as soon as they hit a predetermined threshold.

This system was designed to give smaller investors the same opportunities as large, institutional investors, and to make sure it didn’t get abused by big investors pretending to be small ones, NASDAQ went ahead and outlawed order splitting. This is less of an issue today, since electronic trading platforms have somewhat leveled the playing field by allowing individual investors to quickly execute their own trades, regardless of what those big institutional investors are doing.