Sept 12 (Askume) – Wall Street’s top regulator will vote next week on proposed new rules that would allow stock prices to be set in increments of less than 1 percent, the Wall Street Journal said, part of upcoming stock market structural reforms .
The five-member SEC will consider adopting the minimum price increase, known as “quotation units” in the stock market, at a public meeting on Sept. 18 at 10:00 a.m. (1400 GMT).
This proposal is included in a package of new rules introduced by the SEC in December 2022. Overall, this would be the biggest change in the structure of the stock market in the last 20 years.
The SEC said both buyers and sellers could get a better price if the price changes by less than one percent. Stock prices that are unable to benefit from more aggressive pricing within this range are considered “momentum restricted.”
Under the 2022 proposals, share prices would be quoted and traded in one of four smallest ticks: a penny, a half penny, a fifth of a penny, and a tenth of a penny.
The SEC has not disclosed what changes the authority has made to the proposal that is expected to be finalized next week.
However, industry groups and Republican lawmakers have expressed concerns and called for a half-percent minimum threshold.
The Securities Industry and Financial Markets Association said half-percent moves could be beneficial to stock price quotes and trading, but asked the SEC to do more to determine which stocks are actually subject to “change limits.”
SIFMA said price changes of $0.001 or $0.002 were “too small” and could reduce liquidity or cause “flickering,” where prices frequently fluctuate between two or more values.
It is unclear when the SEC will finalize three other 2022 market structure proposals, including requiring marketable retail stock orders to be sent to auction before they can be executed and setting new standards for stockbrokers to justify themselves for providing these recommendations.
