The Tick-Size Pilot: An Initial View

In 2012, the US Congress passed the JOBS Act to facilitate the creation and expansion of new companies. An important aspect of the law called for the SEC to implement a pilot test to widen the trading increments for mid- and small-capitalized publicly traded securities. The Tick-Size Pilot kicked off October 3. It is now mid-November, and we have initial tick-pilot data. After approximately six weeks, the initial results point to a visually appealing but practically challenging market, as smaller investors are paying more, while larger investors are aggregating more liquidity at a better price; but the overall amount of liquidity has not really changed and effective spreads – what investors actually pay – have widened.

For detailed analysis of the initial tick pilot data, download, “The Tick-Size Pilot: An Initial View,” by Larry Tabb.