Q&A by Don Bright
MARKET LIQUIDITY AND THE TICK SIZE PILOT PROGRAM
Mr. Bright, thanks for all the informa-tion over the years. Your columns have been very helpful. I have been hearing/reading about the possibility of changing from the penny tick size in trading. I have to admit that I’m not sure what this even means. Are exchanges going to make changes? Will traders benefit from these changes? Does this mean the end to subpennies? (I’ve read some of your past columns on the topic of subpennies.) Are these changes coming soon? —Ted A.
Thanks, Ted, for the nice words. Always glad to help. Please keep the questions coming. To address your question, what you’re referring to is the Tick Size Pilot Program (SEC File No. 4-657). “Tick size” here refers to expanding the minimum tick to five cents (or similar) for certain smaller-cap securities. Remember, we “old guys” traded with 1/8th tick sizes and what was called “teenies” (12.4 cents and 6.25 cents as the minimum tick size)...