National securities exchanges and the Financial Industry Regulatory Authority plan to experiment with tick size alternatives, allow some stocks to trade in five-cent increments, and see whether that trading structure increases their liquidity and should be made permanent.
The proposal, announced by the Securities and Exchange Commission on Tuesday, will create a 12-month pilot program for widening minimum quoting and trading increments for a sampling of companies with market cap of $5 billion or less. The SEC plans to use the results of the pilot program to assess whether the changes benefit of investors and issuers.
