Intelligent Ticks
Proposal from Nasdaq and a coalition of market participants to improve U.S. equities trading
exploreThe U.S. public equities markets are the most liquid, competitive and technologically advanced in the world.
Yet, we believe outdated policies hinder the market’s ability to reach even greater heights. One of the highest-priority reforms laid out in TotalMarkets is replacing the current one-size-fits-all tick regime with a model that benefits investors by improving the tradability of low- and high-priced publicly traded securities.
READ OUR FULL PROPOSAL
A smarter approach to tick-sizes— which has already been adopted in markets outside the U.S. – will lower costs for investors and reduce complexity.Tal Cohen, EVP Nasdaq Market Services North America
Collaborative Proposal
We convened a coalition of market participants to put forth a specific set of recommendations for the SEC to consider. Our recommendation is the adoption of a market based approach where no tick would be wider than a stock’s average quoted spread. This approach ensures no spread would be forced wider than that at which it currently trades. The goal is to reduce costs for investors through tighter and more stable spreads. Further, as stock trading characteristics change over time, market forces would determine in which of six 'Intelligent Tick' size buckets an equity would trade: .5cps, 1cps, 2cps, 5cps, 10cps, 25cps.
Explore
Our Intelligent Ticks proposal is meant to advance the debate and spur the Commission to act.
VIEW OUR PROPOSALExamine
TotalMarkets expanded our agenda to a serious and balanced debate on the market structure that supports the trading of public companies.
VIEW OUR BLUEPRINTWhy Now
Tick size is a crucial component of trading costs and investor experience. The benefits of our proposal are clear:
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NARROWER SPREADS
Expects to narrow the current spread for a significant number of tick constrained stocks.
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PRICE STABILITY
Reduces quote flickering and promotes price stability for stocks that currently trade in significant multiples of the $0.01 increment.
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LOWER COSTS
Spread narrowing will reduce costs to investors, anywhere from $100 million to $1 billion annually.
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LESS COMPLEX
Evidence suggests fragmentation, routing complexity and opportunity costs may also be reduced.
As markets evolve, so must the rules that govern them. As liquid and technologically proficient as our markets are, they are constrained by a one-size fits-all regulatory regime.
