On September 18, 2024, the Securities and Exchange Commission (SEC) approved amendments to Regulation NMS (the Amendments) that take several steps intended to narrow bid/ask spreads, reduce transaction costs for investors and enhance market transparency. Opinions among market participants on how best to achieve these goals—and whether the SEC’s adopted approach will realize them—have differed as the Amendments have worked their way through the rulemaking process.
The Amendments will
- establish a second minimum pricing increment (or “tick size”) of $0.005 under Rule 612 of Regulation NMS for quoting “tick constrained” NMS stocks;
- reduce the access fee caps under Rule 610 of Regulation NMS from $0.003 (30 mils) per share to $0.001 (10 mils) per share for NMS stocks quoting at or above $1.00 (and from 0.3% to 0.1% of the quotation price per share for NMS stocks quoting at less than $1.00) and require national securities exchanges to make the amounts of all fees and rebates determinable by market participants at the time of execution; and
- accelerate the implementation of the “round lot” and “odd-lot information” definitions adopted under the Market Data Infrastructure Rules (MDI Rules) and add information about the “best odd-lot orders” (or BOLO) to the definition of “odd-lot information.”
