The inclusion of a trade-at provision in the US Securities and Exchange Commission’s
(SEC) tick size pilot programme could prevent the study from
gathering the very data it is seeking.
The pilot is intended to measure the effect of
larger spreads in stocks with smaller market capitalisation
(small cap). In May the SEC directed the Financial Industry
Regulatory Authority (Finra) Wall Street’s
self-governing body and the exchanges to create a plan for the
pilot the program.
The proposed version, released for comment at the beginning
of November, has sparked criticism from the broker-dealer
community, because of the inclusion of a trade-at provision.
Trade-at rules are intended to push more trading on to
exchanges from dark pools. But opponents argue the provision
will distort the results of the...