Thursday, May 7, 2015

SEC backs test of stock trades in 5-cent increments


One more evidence that USA is an aristocracy- a system that is ruled by rich individuals/institutions. To help NYSE/NASDAQ to regain their market share against more efficient private exchanges, USA regulators are going to force investors to trade stocks in 5 cents increments-- that means, if you are buying 1000 stocks, you have to either pay $50 more or miss a chance to miss a trade!!! You can't trade in increments of 1 cent! And nobody is complaining...poor us common people of USA who have unfortunately no lobbyist in DC frown emoticon


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U.S. regulators approved a new study on Wednesday that calls for widening the increments, or "ticks," at which smaller companies' stocks are priced to see if this helps improve market liquidity.

The Securities and Exchange Commission said that the "tick size pilot" will commence on May 6, 2016, and will include batches of control and test groups of the stocks of companies with $3 billion or less in market capitalization.

One of the groups of stocks in the study will be subject to a controversial reform known as a "trade-at" rule, which could help drive more traffic onto stock exchanges and away from alternative trading venues like dark pools.

The New York Stock Exchange and Nasdaq OMX have long advocated for testing a trade-at rule, which would require brokerages to route trades to public exchanges, unless they can execute the trades at a meaningfully better price than what is available in the public market.

Such a rule would likely result in fewer orders being executed on dark pools and other platforms, which compete directly for order flow with the exchanges.

The genesis for the tick size pilot began in 2012, when Congress passed the Jumpstart Our Business Startups (JOBS) Act.


http://www.reuters.com/article/2015/05/06/us-sec-test-ticksize-idUSKBN0NR2I720150506

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