SEC May Allow Subpenny Pricing

23

February, 2010

A recent Businees Week article by Nina Mehta states that the SEC will probably consider allowing more stocks to trade in price increments of less than 1 cent.  http://www.businessweek.com/news/2010-02-23/sec-may-allow-subpenny-pricing-for-more-stocks-shillman-says.html

Question: Why does a long term investor need sub penny quotes?

Answer: They don’t.

The only market participants seeking sub penny quotes are the high frequency trading firms and the exchanges.  We know that the biggest revenue providers to the exchanges are the HFT’s.  When the HFT’s want a rule change , the process usually takes a similar approach:

1- They demand that the exchamges provide them what they want or they will take their

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