14 Nov Tick Size Pilot Program Delayed

Last week the SEC announced it is allowing the national securities exchanges to wait until October 2016 to implement its highly vaunted tick size pilot program. Originally the plan was to commence in May, but the SEC feels the exchanges (and FINRA) need more time to set up the trading and reporting systems necessary to properly implement the plan and assess results. The two-year pilot program will focus on smallcap stocks and essentially mandate trading in five cent increments, rather than a penny.

In many ways the brainchild of former Nasdaq Vice-Chairman David Weild, the pilot will test if more brokers will be attracted to small cap stocks if they are able to make more on trading with larger tick size spreads. The cost of investing does increase slightly, but if this can help smaller companies increase attention from Wall Street, one would think that could help everyone.

Many believe that the decimalization of spreads in the early 2000s is a major reason the traditional IPO market plummeted so dramatically in recent years, and one of the reasons there are many fewer public companies, especially in the small cap markets, than before this change.

Today, however, I am thinking about the City of Light, my thoughts and prayers are with Paris on this very sad day.