Tick Size Pilot Plan to be filed Monday

Tick Size Pilot Plan to be filed Monday



by Jim Toes

I wish I could say that it seems like only yesterday when we wrote a letter to the Senate Committee on Banking, Housing and Urban Affairs offering our thoughts on H.R. 3606, the “Jumpstart Our Business Startups Act”, aka, the “JOBS Act”. That letter was dated March 2012.  One of the key provisions of the JOBS Act was the designation of “Emerging Growth Companies” EGCs. This designation provides these companies would certain regulatory relief making it easier and less costly for them to go public.  According to Audit Analytics since the JOBS Act was passed through May 2014, 548 companies have gave gone public. Of these IPOs, 422 (77%) identified themselves as Emerging Growth Companies, EGCs.


“Debate which we hope evolves past the logic for conducting such a pilot but instead focuses on how it can be designed and implemented with the greatest chance to achieve its goal of gathering empirical data required for a more permanent decision.”

Passage of the JOBS Act also marked a pinnacle moment in our industry’s debate on the effects decimalization-with no minimum price variations-has had on the secondary trading for EGCs. Next Monday, or sometime soon thereafter, the SRO’s and FINRA will file an NMS plan to implement a 12 month pilot program that will widen minimum quoting and trading increments for certain size companies. To be clear, this filing will not mark the final chapter on tick sizes. There will be a comment period and an implementation period before the pilot program goes live. The filing however will undoubtedly cause our industry to engage in fresh debate on this topic. Debate which we hope evolves past the logic for conducting such a pilot but instead focuses on how it can be designed and implemented with the greatest chance to achieve its goal of gathering empirical data required for a more permanent decision. Everyone has had their opinion heard, the question before our industry now is, “how will we do this” and not, “should we do this”.

As we enter the final days of summer, we hope you all found time to spend with your family and friends. If not, well there are still a few weeks left to do so.

Exchange leaders; Bob Greifeld, NASDAQ OMS, Tom Farley, NYSE Euronext and Edward Provost, CBOE to participate at STA’s 81st Annual Market Structure Conference. Complete program and registration information here

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