Trade-at will distort tick size pilot

Author: Zoe Thomas | Published: 26 Nov 2014

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...