Sub-Penny Rule
E448133
The Sub-Penny Rule is a U.S. securities regulation that generally prohibits stock quotes in price increments smaller than one cent for most exchange-listed equities to reduce market fragmentation and improve quote clarity.
Statements (47)
| Predicate | Object |
|---|---|
| instanceOf |
U.S. securities regulation
ⓘ
market structure rule ⓘ |
| affects |
alternative trading systems
ⓘ
broker-dealers ⓘ national securities exchanges ⓘ |
| allows | sub-penny quoting for securities priced below $1.00 ⓘ |
| alsoKnownAs | sub-penny quoting rule NERFINISHED ⓘ |
| appliesTo |
National Market System stocks
ⓘ
exchange-listed equities ⓘ |
| citation | 17 CFR 242.612 ⓘ |
| codifiedIn | Rule 612 of Regulation NMS NERFINISHED ⓘ |
| criticizedFor |
creating advantages for internalizers and dark venues
ⓘ
potentially limiting price competition at very tight spreads ⓘ |
| doesNotProhibit |
internalization of orders at sub-penny prices when not displayed
ⓘ
sub-penny executions resulting from price improvement ⓘ |
| effectiveYear |
2005
ⓘ
2006 ⓘ |
| enforcedBy |
U.S. Securities and Exchange Commission
NERFINISHED
ⓘ
self-regulatory organizations ⓘ |
| exceptionFor |
block trades meeting size thresholds
ⓘ
negotiated trades not displayed in public quotations ⓘ odd-lot orders in certain circumstances ⓘ stocks priced below $1.00 ⓘ |
| implementedBy | U.S. Securities and Exchange Commission NERFINISHED ⓘ |
| influencedBy | concerns about market fragmentation in early 2000s U.S. equity markets ⓘ |
| intendedEffect |
limit sub-penny price stepping ahead of displayed quotes
ⓘ
reduce flickering quotes ⓘ simplify price discovery for investors ⓘ |
| jurisdiction |
United States of America
ⓘ
surface form:
United States
|
| legalBasis | Securities Exchange Act of 1934 NERFINISHED ⓘ |
| partOf | Regulation NMS NERFINISHED ⓘ |
| policyGoal |
protect retail investors from sub-penny gaming
ⓘ
support efficient price formation ⓘ |
| prohibits | quoting in price increments smaller than $0.01 for most covered securities ⓘ |
| purpose |
enhance transparency of displayed quotations
ⓘ
improve quote clarity ⓘ promote fair and orderly markets ⓘ reduce market fragmentation ⓘ |
| regulates | equity securities quoting ⓘ |
| relatedTo |
Regulation NMS Order Protection Rule
NERFINISHED
ⓘ
tick size ⓘ |
| requires | minimum quoting increment of $0.01 for most NMS stocks priced at $1.00 or more ⓘ |
| scope | NMS stocks quoted on national securities exchanges and associations ⓘ |
| status | in force ⓘ |
| subjectOf |
SEC concept releases and rulemaking discussions on equity market structure
ⓘ
ongoing policy debates about tick size reform ⓘ |
| targets | displayed quotations in NMS stocks ⓘ |
Referenced by (1)
Full triples — surface form annotated when it differs from this entity's canonical label.