I’m old enough to remember when stock prices were quoted in eights. They had been marked that way for 200 years on the New York stock exchange. Then they were shifted to decimals. That pushed the bid-ask spread for many stocks to $.01. Now that penny limit is being cut in half.
The Securities and Exchange Commission just enacted changes to Rule 612 which will reduce the tick size to $.005.
Now we have to figure out what systems and spreadsheets will break because trading is happening in half-pennies.
Sources:
- SEC Adopts Rules to Amend Minimum Pricing Increments and Access Fee Caps and to Enhance the Transparency of Better Priced Orders
- Rule Details
- Fact Sheet
- Tick Sizes and Market Quality: Revisiting the Tick Size Pilot by Yashar H. Barardehi, Qiyu Liu, Peter Dixon, and Ariel Lohr November 28, 2002