By Jonathan Spicer
NEW YORK, Jan 26 (Reuters) – The major U.S. exchanges are considering asking regulators to allow price quotes in increments as small as one-tenth of a cent for some stocks, a move that could revamp trading fees and the flow of orders in capital markets.
NYSE Euronext, Nasdaq OMX, privately held
BATS Global Markets and alternative venue Direct Edge, which plans to become a formal exchange operator this year, said the most heavily traded stocks could be priced more efficiently if they had narrower increments, or “tick sizes.”
Any narrowing of the ticks would likely involve only a subset of securities, possibly those stocks worth less than $5 or $10, some exchanges said. The current penny increment could be narrowed to a half-penny or as much as a tenth of a penny.
Nasdaq, BATS and Direct Edge executives told Reuters they would also consider increasing the tick sizes for thinly traded stocks if that would help them to trade more freely.
The venues added there is no formal coordination to push for changes as the U.S. Securities and Exchange Commission conducts a broad review of the mostly electronic U.S. markets.