Abstract
Purpose – To explain a joint effort by the national securities exchanges to implement a Tick Size Pilot program. The pilot program would widen the minimum quoting and trading increments for certain small cap stocks. Design/methodology/approach – The article reviews the Tick Size Pilot plan generally, discusses how the final plan differs from proposed plan, describes securities that will be affected by the plan, and the various test groups under the plan. Findings – Pilot program is designed to provide the SEC with empirical data regarding the impact that tick size may have on the trading of small cap stocks. Practical implications – Exchanges will be required to adopt rules to implement the pilot program. Broker-Dealers will be required to adopt written policies and procedures to comply with the pilot plan when quoting and for trading. Originality/value – Practical guidance from experienced securities lawyers. The article describes the operation of the new pilot program.
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