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Securities Compliance Sentinel Analysis of cutting-edge securities industry issues

What Are the Problems with Ticks and Minimum Spreads?

Posted in Capital Formation, Securities Associations, Securities Exchanges

A senior Congressman has indicated that he wants to see a wide-ranging pilot program to examine different minimum spreads for different stocks.  He believes that such a program would allow the SEC to determine if tick sizes in equity markets are appropriate.

Tick sizes are increments whereby a stock price may move, and, currently, that size is $0.01.  Other global markets have different values.  This senior Congressman wanted a large number of stocks in the program to provide enough data, and he wanted the review completed by the end of this year.  There is no indication that this study is currently being conducted.

Nonetheless, at least theoretically, it presents an interesting possibility for real market change if taken seriously.