Securities Regulators Seek to Improve Small-Cap Liquidity


On October 3 the SEC approved the “Tick Size Pilot” (TSP) program. TSP will widen the increments at which small-cap stocks — those valued under $5 billion with share prices greater than $2 — are priced, to $0.05 from $0.01.

Regulators hope that TSP will result in greater investor interest in small cap stocks and thus more liquidity.

The pilot program will consist of control group and three test groups comprised of roughly 400 securities each.

While this pilot only applies to small cap stocks, it is good to see the the National Securities Exchanges, the Financial Industry Regulatory Authority, and the Securities and Exchange Commission working together to increase liquidity for smaller trading securities. Perhaps if things go well with this pilot we will see similar efforts made for microcap securities.






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