SEC
SEC to test using wider 'tick size' for stock trading
WASHINGTON, Feb. 21 (UPI) --
Washington regulators said Friday pricing stock penny by penny might be improved by increasing the minimum to a nickel, for example.
The U.S. Securities and Exchange Commission said the regulator would implement a test program that would have stocks trading with wider tick sizes, a tick being essentially like the motion of a second hand on an old clock, which might move 1 second at a time.
Implementation of a tick-size pilot, along carefully defined parameters that would widen the quoting and trading increments and test, among other things, whether a change like this improves liquidity and market quality, SEC Chairwoman Mary Jo White said in a speech in Washington.
The Wall Street Journal reported the plan has broad support on Wall Street.
In November, a working group of finance professionals and investors submitted a plan to the SEC called the Small-Cap Trading Rules or STAR for short.
Proponents say the wider tick sizes would make a bigger difference between buy and sell orders and that would be especially helpful to small companies, making trades more attractive, but take out some of the rough spots.
A committee that advises the SEC, however, said the plan would benefit brokers at the expense of investors.
Source: United Press International (Feb 21, 2014 14:46:06 EST)
