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Meet the new math, same as the old math: In an upcoming meeting, the SEC will look at bringing...

Meet the new math, same as the old math: In an upcoming meeting, the SEC will look at bringing back fractional stock prices - 1/8 and 1/16 ticks, instead of penny pricing. At heart is the power of market makers who used to be accused of improperly raising trading costs. Proponents of going back argue that higher bank profitability from bigger tick sizes will make the environment more welcoming for small companies in their IPOs.
Comments (21)
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    I call BS. Banks and market makers should be built around the real economy, not the other way around.
    27 Oct 2012, 09:10 AM Reply Like
  • bbro
    , contributor
    Comments (9445) | Send Message
     
    This is baloney...
    27 Oct 2012, 09:28 AM Reply Like
  • frosty
    , contributor
    Comments (691) | Send Message
     
    I hope they do go back and also get rid of dimes, nickles and pennies in favor of 12 1/2, 6 1/4 and 3 1/8 cent pieces. Gasoline should also be repriced to $3.9375 & 15/16. There are many untold benefits to be gained from converting to this system.
    27 Oct 2012, 09:49 AM Reply Like
  • Charliehbryan
    , contributor
    Comments (115) | Send Message
     
    Ha-ha. I'd personally like to see shillings, guineas and farthings make a big comeback :)
    27 Oct 2012, 11:04 AM Reply Like
  • spald_fr
    , contributor
    Comments (2711) | Send Message
     
    Nickle and dime bags! That's the ticket.
    27 Oct 2012, 12:42 PM Reply Like
  • Charliehbryan
    , contributor
    Comments (115) | Send Message
     
    Widen the bid-ask spreads. Why that's the ticket! NOT!
    27 Oct 2012, 10:06 AM Reply Like
  • robgra
    , contributor
    Comments (361) | Send Message
     
    Another plot to rob the retail investor. Doesn't HFT steal enough?
    27 Oct 2012, 10:06 AM Reply Like
  • bbro
    , contributor
    Comments (9445) | Send Message
     
    Let's just go back to fixed minimum commissions...E.F. Hutton anyone??
    27 Oct 2012, 10:17 AM Reply Like
  • captiankirkoptions
    , contributor
    Comments (193) | Send Message
     
    This is complete BS.
    27 Oct 2012, 10:34 AM Reply Like
  • wyostocks
    , contributor
    Comments (7703) | Send Message
     
    Higher bank profits is all the government wants. Just ask Ben.

     

    The SEC refuses to go after Jon Corzine or HFT so they need some make work projects for the staff to be occupied with.
    27 Oct 2012, 11:16 AM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    For an investor this really does not matter in a material way. Traders may not like it but good traders will have it in their models.

     

    Having said that I don't think this solves IPO problems. That is a problem with our economy and crazy people in WDC being anti business and threatening regulation and taxes.
    27 Oct 2012, 11:26 AM Reply Like
  • David Urban
    , contributor
    Comments (1036) | Send Message
     
    I can't stop laughing at the tenuous grasp of IPO pricing to bid sizes.

     

    It has no bearing on IPO's.

     

    Private companies are not coming public because they do not trust the capital markets.
    27 Oct 2012, 11:50 AM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    DU

     

    That is not true by any stretch. Trust in the capital markets may be an issue but not for IPO's.

     

    Companies have investors that have their exit strategy as an IPO but without knowing the tax impact of an event they have no idea of their return. It is also hard to grow a company in an economy that is basically flat to negative if you take out the effects of inflation on the GDP numbers. And SOX requirements are stringent to the extent many small companies cannot afford to build the infrastructure necessary to meet the requirements. Top it off with unknown health care costs and it is surprising that anything happens.
    27 Oct 2012, 07:25 PM Reply Like
  • jstratt
    , contributor
    Comments (2281) | Send Message
     
    I doubt that we will return to that archaic system.

     

    However the HFT community will find a way to raise revenues since trading volume has dropped off. After all their existence is based on the ability to steal trading data and front run legitimate investors. A practice that would be illegal in any ethical civilized society.

     

    The result for me and apparently many others is to invest in higher volume liquid stocks for the longer term and not to actively trade.

     

    The HFT's will steal what they can.
    27 Oct 2012, 12:24 PM Reply Like
  • winningtrader
    , contributor
    Comments (2476) | Send Message
     
    This is the most ridiculous of arguments. I doubt that even the banks can get away with that but who knows. I wouldn't be shocked to see them succeed. Finally they have a strong lobby and can bribe people.
    27 Oct 2012, 01:22 PM Reply Like
  • jerrycalpha
    , contributor
    Comments (59) | Send Message
     
    This is total BS. Decimalization has made life easier for everyone. Keep it! This seems like finding a scapegoat so HFT can keep flying under the radar. Curbing HFT has so many good solutions, but this isn't one of them. One concept I like is charging a premium for adding noise to the market. The higher the frequency/amplitude, the higher the premium.

     

    Give me a break - 1/8's Total BS!
    27 Oct 2012, 01:31 PM Reply Like
  • davidbdc
    , contributor
    Comments (3149) | Send Message
     
    Maybe I've been sleeping the past decade, but I didn't realize that pricing in pennies is somehow a major issue for IPO's?

     

    Lets break up the TBTF banks and re-institute Glass-Steagall and publicly announce there are zero future bailouts and let folks lose their money when 1. They are stupid. 2. They are stupid and invest in computer programs that sell stocks for a penny. 3. They are stupid and bet on derivitives they don't understand. 4. They are stupid and give their money to a dumb fund manager that loses it all. 5. They are stupid and lose all their money in the latest "hot" thing.

     

    Note the common thread??? And the good news is that you have the freedom to be stupid in this country..... what you shouldn't have is the right to expect the government to bail you out.
    27 Oct 2012, 01:36 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    If you want to get rid of HFT pass a law that if a trade clears it cannot be reversed so if you sell IBM for $1.00 a share then you need to deliver it.

     

    There would be a clearance sale on computers!
    27 Oct 2012, 07:28 PM Reply Like
  • David Urban
    , contributor
    Comments (1036) | Send Message
     
    Better yet, get rid of skunk quotes and make quotes sit for at least a minute.
    28 Oct 2012, 01:32 PM Reply Like
  • The Shareholder
    , contributor
    Comments (21) | Send Message
     
    This won't get any traction. I can see some market on the thinly traded periphery of the OTC system trying it with many inactive stocks, but those market prices tend to huddle around prices with quarters and halves anyway.
    27 Oct 2012, 10:50 PM Reply Like
  • Fr33f0rm
    , contributor
    Comments (300) | Send Message
     
    I think it's a fair trade, we move back to fractions and stocks have a minimum 60 second hold time. That will get rid of front-running advantages and market makers will still be able to make money.
    28 Oct 2012, 11:08 PM Reply Like
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