Are you ready for a big change in the world of stock trading? The U.S. Securities and Exchange Commission is set to vote on a proposal that could allow for half-penny increments in the pricing of many large-cap stocks. This change could have a significant impact on most of the largest stocks, including those in the S&P 500, as well as some highly liquid Exchange Traded Funds (ETFs).
But why is this change happening now? The stock brokerage business has seen significant shifts in pricing increments over the years. From the traditional eighth of a dollar in the 1800s to the current one cent increment, the industry has continued to evolve. These reductions in tick size have made stock trading less profitable for brokers but have benefited buyers and sellers of stocks by reducing trading costs and improving market liquidity.
The debate over further reducing tick sizes has been ongoing, with discussions about adding increments of a tenth of a cent, a fifth of a cent, or a half cent. Most experts believe that a half-cent increment will likely be the chosen option, as trading in smaller increments could create too many price points.
If you’re concerned about your favorite stocks being quoted in half-penny increments, don’t worry just yet. Implementing this change will take time, as it requires adjustments in the systems that display quotations. Most market participants predict that any change will likely take a year or more to fully implement.
Stay tuned for more updates on this potentially game-changing development in the stock trading world. And remember, at Extreme Investor Network, we strive to provide you with the latest information and insights to help you navigate the ever-evolving market landscape with confidence.