Market Structure Report: The Tick Size Debate, Revisited

New data on post-reverse split ETP trading supports our tick reform recommendations

Back in August 2021, MEMX submitted a request for exemptive relief to the Securities and Exchange Commission (“SEC”) requesting that the SEC permit “tick constrained” NMS stocks that trade with an average quoted spread of 1.1 cents or less to be quoted in a half penny increment ($0.005), along with a commensurate 50% reduction in the access fee cap ($0.0015) for any securities trading in that smaller increment. Attached to the request was a white paper illustrating the potential benefits of tick reform, which include improved quote quality, lower trading costs, and greater venue competition.

Now that we’ve entered a new year, and consistent with our dedication to data-driven market structure reform, we thought it made sense to quickly revisit the data on tick constrained NMS stocks to see how our recommendations have held up.