Tick Size Widens To A Nickel For Select Small-Company Stocks
Starting Monday, shares in some small companies will begin trading in five-cent increments instead of the typical one-cent increments as the first adjustment to “tick” sizes in 15 years hits the US stock market.
The shift is part of an experiment to see if widening tick sizes does anything to boost trading in small-cap stocks despite the higher trading costs it could mean for investors, the Wall Street Journal reports. The Tick Size Pilot Program starts today with 10 stocks and aims to include around 1,200 companies by the end of the month.
The SEC started looking into the program in 2014, wondering whether larger trading increments for small stocks would increase interest in IPOs and help churn economic growth. While that’s still part of the equation, today the ultimate hope is that widening tick sizes will boost liquidity without moving price. [WSJ]