On September 18, 2024, the U.S. Securities and Exchange Commission ("SEC") adopted amendments to certain rules of Reg NMS, making changes to minimum tick sizes for the quoting of certain NMS stocks, reducing access fee caps and accelerating the implementation of round lot and odd-lot information definitions (the “Final Rule”). 

First, the Final Rule establishes a new minimum tick size of $0.005 for quotes and orders in NMS stocks priced at or greater than $1.00 per share.  The amended tick size applies for over 2,000 NMS stocks, more than the number of stocks that are truly tick-constrained and highly liquid.  The proposed rule would have established four categories of minimum tick sizes based on the time weighted average quoted spread of the NMS stock, ranging from $0.01 to $0.001.  In our comment letter, AIMA supported the half-penny quoting increment for tick-constrained stocks that exhibit a high degree of liquidity.  We opposed moving the minimum quoting increment to as low as 1/10^th of a penny because of myriad, negative consequences likely to occur, e.g., fragmenting displayed liquidity across too many price points, flickering quotes and more.    

Second, the Final Rule amends Reg NMS Rule 610 to reduce the access fee caps for protected quotes in NMS stocks priced at $1.00 per share or more to $0.001 per share instead of the current $0.003 per share.  The updated Rule 610 will also prohibit exchanges from imposing any fee or providing any rebate for the execution of an order in an NMS stock unless the fee or rebate can be determined at the time of execution.  Exchanges will be required to set any volume thresholds or tiers based on volume achieved for a period prior to the assessment of the fee or rebate.  AIMA supported a reduction in access fee caps commensurate with the reduction in tick sizes; however, the across-the-board reduction in access fees was not proportionate to the reduction in tick sizes.

Finally, the Final Rule accelerates the date by which market participants must implement the odd-lot information and round lot definitions adopted under the Market Data Infrastructure Rules adopted in 2020.  The changes to Rule 603(b) will require exclusive SIPs to collect, consolidate and disseminate odd-lot information and will require exchanges and associations to provide the data necessary to generate to generate odd-lot information to the exclusive SIPs.  

The Final Rule will go into effect 60 days from its publication in the Federal Register.  The compliance date for the tick size, access fee and round lot definition changes is the first business day of November 2025.  The compliance date for the odd-lot information is the first business day of May 2026.

Please contact Adam Jacobs-Dean or Daniel Austin with any questions regarding these requirements.

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  Adam Jacobs-Dean

  Managing Director, Global Head of Markets, Governance and Innovation, AIMA

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  Daniel Austin

  Head of U.S. Markets Policy and Regulation