A last sale is the term used to describe the price of the final trade made on an exchange at the end of the trading day. In some cases, the term may identify the most recent price offered on a security that is being actively traded. The identification of the last sale can be important, since it serves as the point of reference for certain regulations that are in effect on the exchange where the trading activity takes place.
There is sometimes confusion between what is meant by a last sale and a closing sale. The closing sale refers to the final transaction that takes place within a specific trading session on a particular security, and is likely to be used when the investor wants to exchange a short position for a long one, or a long position for a short one. In contrast, the last sale focuses on the most recent price involved with an active trading session, or the last transaction to be completed at the end of a trading day. While it is possible that the price designated as a last sale at one point in the trading process may eventually become the closing sale, the two terms refer to two different points in the trading activity, and should not be considered synonymous.
The designation of a last sale is often important when it comes to observing certain regulations that apply to the exchange where the trading is taking place. For example, with the Securities and Exchange Commission (SEC) in the United States identifies the last sale and relates that price to a couple of specific regulations. One of the regulations that apply has to do with the creation of a short sale on any national exchange. In this scenario, the short sale cannot be made at a price that is below the last regular sale.
A different SEC regulation decrees that the price for the short sale cannot equal the price of the last sale, except under certain conditions that are outlined in the regulation. Securities commissions in other countries follow similar regulations in regard to the identification and use of the sale in trading situations, although there is some variance in exactly how the price impacts the trading process. While the criteria for determining what can be classified as a last sale is consistent, investors would do well to understand trading regulations in the specific exchanges involved, and identify the role of the sale in those regulations.
