15 Oct When Can Ticks be a Good Thing?

I know too many people battling lyme disease. It is a misunderstood and wrongly made fun of illness. It generally comes from bad tick bites. If you treat it quickly with antibiotics it goes away. If you don’t you can face a lifetime of challenges. So when in doubt with a bite, hit the doc.

So that’s that, but our topic today is a different kind of tick. Namely tick sizes in quoting stock prices. Starting October 3, as mandated by the JOBS Act, the SEC is conducing a two-year pilot program. In the program they will allow a select group of companies to quote spreads between the “bid” and “ask” prices in 5 cent increments instead of the current penny spread.

Back in the day the spreads were as much as a quarter, but were 12.5 cents for a long time. The bigger the spread, the more intermediaries and brokers have an incentive to take parts of the spread and offer them around to encourage trading and market support and reduce volatility in trading. But investors lose a little in the process. So the new move to greater spreads is being done hesitatingly. About 1200 stocks, all with prices below $2.00 a share, will be in the initial test. The hope is this will lead to greater volume and liquidity in the trading of these stocks. Let’s see if it helps (my bet: it will)!