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Wednesday, Oct 23
Citi backs wider tick size experiment
- Saying the move "would help enhance liquidity," Citigroup (C) - in a letter to the SEC - proposes a one-year pilot program testing the pricing of stocks in nickels or dimes instead of pennies.
- The letter comes as those in the industry and regulators talk about adjusting tick sizes for less-frequently traded stocks, and Citi is one of Wall Street's largest market-making firms. Stocks only shifted from trading in "teenies" to pennies in 2001.
- "In some cases, increasing the minimum quoting increment from a penny to a nickel makes sense; in other cases, increasing the increment to a dime (depending on average daily volume traded and stock price) or even a quarter (particularly for very high-prices securities) may be warranted."