SEC pilot program for tick size on penny stocks?

[Metamega]

So my broker had a notification of this pilot the SEC is doing on midcaps with capitalization of 3 billion and under and 2.00$ or less .

Their going to have a minimum tick size of .05$ to try and improve liquidity.

Not that this is anything I ever trade but this sounds kind of nuts doesn't it?

 

[Daal]

Its a good idea if they test this out in a few tickers just to see what happens. if its broad based right away, then its nuts

 

[Robert Morse]

Not that this is anything I ever trade but this sounds kind of nuts doesn't it?

Very confusing for the public. I wonder who the SEC thinks this will benefit?

 

[Occam]

The 5c tick pilot is not for penny stocks -- it's for smaller-cap stocks that are above $2.00 initially (although they'll remain on the list unless they close below $1.00 for one day). Here is a URL that contains lists of penny pilot stocks, to be updated once the pilot goes live on Oct 3:

http://www.finra.org/industry/oats/tick-size-pilot-data-collection-securities-files

I agree that the motives, not to mention the details, are confusing -- one of the FAQ's on the FINRA site is 48 pages long! I certainly don't think that this is going to increase "analyst research" for small caps (one of the supposed motivations for the pilot). I'm sure it will increase the size of the bid/offer, for what that's worth.

The aspect that most interests me is the bucket of "trade-at" securities, which I think is potentially really good, although they've left quite a few loopholes -- they really should have just had a bucket with no internalization, as that's the biggest single thing harming displayed small-cap liquidity in today's microstructure. When >50% of a security's volume is internalized to wholesalers, it has a pretty bad impact on the displayed market.

http://www.nanex.net/aqck2/3519.html

 

[zdreg]

So my broker had a notification of this pilot the SEC is doing on midcaps with capitalization of 3 billion and under and 2.00$ or less .

Their going to have a minimum tick size of .05$ to try and improve liquidity.

Not that this is anything I ever trade but this sounds kind of nuts doesn't it?

it is wall street up to its old tricks to give themselves an advantage over the public. it will benefit the market-makers.it is a scam by market makers to get you to lose .05+ on each trade. they couldn't make a high living with .01 spreads or so they claim. it is to enrich themselves while trying to delude the public into thinking that they are benefiting from the change,

 

[JesseJamesFinn1]

it is wall street up to its old tricks to give themselves an advantage over the public. it will benefit the market-makers.it is a scam by market makers to get you to lose .05+ on each trade. they couldn't make a high living with .01 spreads or so they claim. it is to enrich themselves while trying to delude the public into thinking that they are benefiting from the change,

When Decimalization started the Market Makers were losing a lot of cash. NITE admitted once the program went to pennies on all stocks their profits were nothing compared to the glory days of fractions. I see no way this will benefit public, mutual funds and large traders complain about HFTS front running them on orders so how will it benefit the bigger fund traders and Block Trader Traders? Once again the SEC is showing who their Masters are!

 

[Metamega]

I do believe this idea is most likely the market makers idea as the SEC seems to listen to them more then care about the interest of the general public.

I just foresee wide spreads and God forbid theirs a mini crash on one of these experiments. The slippage would be massive since the book isn't very deep relative to value.

Always wondered what trading in the fraction days was like. Sounds like a fun time.

 

[zdreg]

the

I do believe this idea is most likely the market makers idea as the SEC seems to listen to them more then care about the interest of the general public.

I just foresee wide spreads and God forbid theirs a mini crash on one of these experiments. The slippage would be massive since the book isn't very deep relative to value.

Always wondered what trading in the fraction days was like. Sounds like a fun time.

I would not use the phrase fun time. there were hardly any retail traders in those days + orders were entered manually and the fixed commissions were 10X to 50X higher than the negotiated commissions today.

 

[JesseJamesFinn1]

I do believe this idea is most likely the market makers idea as the SEC seems to listen to them more then care about the interest of the general public.

I just foresee wide spreads and God forbid theirs a mini crash on one of these experiments. The slippage would be massive since the book isn't very deep relative to value.

Always wondered what trading in the fraction days was like. Sounds like a fun time.

Remember the stocks with $15-$50 spreads on shares above $500? There was a Farmer's Banking Company that did about 1000 shares a week. They kept the spread almost $50 wide. The stock would be priced at $850 x $890, when day traders would show up Market Makers loved to play their game. Most guys would buy 100 shares, the Market Maker would fill 1 or 11 shares if he was feeling good. Once the size went below 100 shares the Market Maker no longer had to post that on the Level 2.

I enjoyed playing their game because I bought 165 shares, sit out at $875 GTC seeing the 3 to 11 share fills. They loved their gravy, I would use the GTC and my commission was $5 eventually they would fill my order after three days and four commissions. There were too many good stocks to tie up the capital so after making $1750 playing the spread I moved on to other stocks until the Market got weird and joined my friends at this stock again.

 

[RRY16]

So my broker had a notification of this pilot the SEC is doing on midcaps with capitalization of 3 billion and under and 2.00$ or less .

Their going to have a minimum tick size of .05$ to try and improve liquidity.

Not that this is

I do believe this idea is most likely the market makers idea as the SEC seems to listen to them more then care about the interest of the general public.

I just foresee wide spreads and God forbid theirs a mini crash on one of these experiments. The slippage would be massive since the book isn't very deep relative to value.

Always wondered what trading in the fraction days was like. Sounds like a fun time.

It was a hell of a lot more lucrative I will tell you that and easier to read the tape..I wouldn't get to worked up about it, you might be able to use it to your advantage if you have any type of trading prowess... you people that trade stocks everyday for a living are not retail or the general public...lower your order size or grow a pair.