SEC Adopts Amendments To Regulation NMS: New Minimum Pricing Increments, Reduced Access Fee Caps, And Enhanced Order Transparency

On September 18, 2024, the U.S. Securities and Exchange Commission (SEC) announced significant amendments to Regulation NMS (National Market System) aimed at improving market quality, reducing transaction costs, and enhancing transparency in equity markets. These changes, which address minimum pricing increments (tick sizes), access fee caps, and the visibility of better-priced orders, mark a major shift in the regulatory landscape designed to foster competition and protect investors.

Key Changes:

1. Introduction of an Additional Minimum Tick Size:
   The SEC has amended Rule 612 of Regulation NMS to establish a new $0.005 minimum pricing increment for quoting NMS stocks priced at or above $1.00 per share. This new tick size is designed to address limitations imposed by the existing $0.01 minimum, which has constrained price competition for many stocks. The tick size for each NMS stock will now be evaluated based on a three-month Time Weighted Average Quoted Spread