Nasdaq Publishes Proposal for “Intelligent Ticks”
Nasdaq is leading a coalition of market participants recommending to the SEC the adoption of a market-based approach where not tick would be wider than a tick’s average quoted spread. The goal is to reduce costs for investors through tighter and and more stable spreads. As trading characteristics change over time, market forces would determine in which one of six “Intelligent Tick” buckets and equity would trade ($0.005, $0.01, $0.02, $0.05, $0.10,and $0.25.) Stocks would be categorized based upon their duration weighted average quoted spread over the measurement period. Stocks spreads would not widen under this proposal; rather stocks would be assigned the next smallest increment by quoted spread. The proposal follows two previously released reports to layout a comprehensive roadmap to reform U.S. public equities markets.
Under current trading, tick changes are a penny- regardless of stock price. Read the proposal here.
