US SEC votes to allow half-penny stock pricing
Adds industry reaction in paragraphs 10-13
By Douglas Gillison
Sept 18 (Reuters) -Wall Street's top regulator on Wednesday unanimously voted to allow stock exchanges to price many sharesin increments of half a penny, rather than the current minimum size of 1 cent, aiming to promote more competitive pricing and reduce investor costs on the $55 trillion U.S. equities markets.
The new rule should also help stock exchanges compete with off-exchange trading venues, which represent nearly half of trading volume and can already offer smaller price increments, officials at the U.S. Securities and Exchange Commission said.
After the vote by the commission's five members, SEC Chair Gary Gensler said the new rules would promote transparency, fairness and efficiency. "That goes to the heart of the SEC's mission. The reforms are pro-investors. They are pro-capital formation," he said in a statement.
The new rule marks another step in the SEC'splans to adopt what would be the most important market structure reforms in nearly 20 years. However, the SEC faces election-year headwinds in completing allthe changes unveiled in 2022.
The rules apply to the highly technical space between prices stock sellers are willing to accept in a trade and what buyers are willing to pay, known as the bid-ask spread.
Allowing prices to be quoted in increments, or "tick sizes," of less than a penny will result in narrower spreads, cutting transaction costs and allowing for more aggressive pricing, according to the SEC.
"This is an industry where people will sell their grandmothers for four basis points," James Angel, a professor at Georgetown University's McDonough School of Business, said ahead of the vote. "But for the retail investor who buys and sells a share here and there, they're not gonna notice a difference."
Prior to the vote, SEC officials told reporters that 2023 data showed that as many as 1,700 stocks would have qualified as "tick constrained" under the rule due to be adopted, meaning a weighted average of the spread was 1.5 cents or less over a certain period.
The SEC's decision not to include pricing increments smaller than half a cent represents a likely win for industry, which had favored the half-penny increment and objected to sizes included in the 2022 proposal that were as small as a fifth or a tenth of a cent.
The changes adopted Wednesday will also further limit the fees that stock exchanges can charge for access to their marketplaces, denying them a share of revenue.
In a statement, Nasdaq said it was still assessing the rule but warned it would cause "serious harm" on the strength of stock markets in the long term.
"Our initial assessment suggests that the commission's rules lack foresight and do not consider the intricate dynamics of the equity market, ignoring the concerns expressed by a diverse array of market participants," it said.
However, Bryan Corbett, president of the Managed Funds Association, an investment industry lobby group which has sued aggressively to block other SEC regulations during Gensler's tenure, welcomed the change, saying in a statement that investors would benefit from improved market liquidity, efficiency and resiliency.
In reacting to the initial proposal, marketmaker Citadel Securities had forcefully criticized the SEC's market structure proposals, saying tick sizes smaller than half a pennythreatened to reduce liquidity and worsen investor panic in times of stress. The company did not immediately respond to a request for comment.
In general terms, market liquidity suppliers like Citadel stand to benefit from wider tick sizes, according to Georgetown's Angel.
The new rules are due to take effect in November 2025.
They SEC's market structure reforms are in part driven by the GameStop trading frenzy of 2021, in which retail traders suffered substantial losses.
The agency last year shortened the trading settlement cycle to help reduce default risk and in March of this year adopted rules requiring expanded public reporting on the quality of trade executions by broker-dealers and others.
Reporting by Douglas Gillison in Washington; Editing by Jamie Freed and Deepa Babington
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ताजातरीन समाचार
अस्वीकरण: XM Group के सत्व केवल निष्पादन वाली सेवा और हमारी ऑनलाइन व्यापार सुविधा में पहुँच प्रदान करते हैं, ताकि व्यक्ति वेबसाइट पर या उसके जरिए उपलब्ध सामग्री को देख सके और/या उसका उपयोग कर सके। इसका प्रयोजन इसे बदलना या विस्तार देना नहीं है, न ही वह इसे बदलता या विस्तार देता है। इस तरह की पहुँच हमेशा ही निम्नलिखित के अधीन रहेगी: (1) नियम और शर्तें; (2) जोखिम चेतावनियाँ; और (3) पूर्ण अस्वीकरण। इसलिए ऐसी जानकारी सामान्य सूचना से अधिक कुछ भी नहीं है। विशेष रूप से, कृपया इससे अवगत रहें कि हमारी ऑनलाइन व्यापार सुविधा की सामग्रियाँ न तो किसी चीज का अनुरोध करती हैं, न ही वित्तीय बाजारों में प्रवेश करने की पेशकश ही करती हैं। किसी भी वित्तीय बाजार में व्यापार करने के साथ आपकी पूँजी को उल्लेखनीय जोखिम है।
हमारी ऑनलाइन व्यापार सुविधा में प्रकाशित सभी सामग्रियाँ शैक्षणिक/सूचनात्मक प्रयोजनों मात्र के लिए हैं, और इनमें वित्तीय, निवेश टैक्स या व्यापार सलाह और सुझाव नहीं हैं - न ही ऐसा समझना चाहिए कि इनमें ये सब हैं; न ही इनमें हमारी व्यापार कीमतों का अभिलेख है; न ही इनमें किसी वित्तीय उपकरण में लेन-देन करने का निमंत्रण या अनुरोध है; न ही ये आपको अवांछित वित्तयी प्रोमोशन पेश करती हैं।
इस वेबसाइट में मौजूद कोई भी तृतीय पक्षीय सामग्री, तथा XM द्वारा तैयार की गई सामग्रियाँ, जैसे: अभिप्राय, समाचार, अनुसंधान, विश्लेषण, कीमतें और अन्य सूचनाएँ या तृतीय पक्षों की साइटों के लिंक, "जैसा-है-वैसा" के आधार पर बाजार के बारे में सामान्य टिप्पणी के रूप में उपलब्ध कराई गई हैं, और वे निवेश हेतु सलाह नहीं हैं। जिस हद तक कीसी सामग्री को निवेश अनुसंधान मान लिया जाता है, उस हद तक आपको ध्यान में रखना होगा और इसे स्वीकार करना होगा कि वह सामग्री इस उद्देश्य से और निवेश अनुसंधान की स्वतंत्रता को बढ़ावा देने के लिए कानूनी आवश्यकताओं के मुताबिक, तैयार नहीं की गई है, और इसलिए उसे प्रासंगिक कानूनों और विनियमों के तहत विपणन संप्रेषण माना जाएगा। कृपया सुनिश्चित करें कि आपने गैर-आश्रित निवेश के बारे में हमारी सूचना को पढ़ और समझ लिया है। पीछे दी गई जानकारी के बारे में अनुसंधान और जोखिम चेतावनी यहाँ उपलब्ध है।
