Tick Size Pilot Program

As part of this two-year pilot, stocks were categorized into four distinct groups:

1. A control group that maintained their original tick sizes for quoting and trading.
2. A first test group quoted in $0.05 increments while continuing to trade at their original tick sizes.
3. A second test group that both quoted and traded in $0.05 increments, with exemptions for midpoint executions, retail investor transactions, and negotiated trades.
4. A third test group that followed the second group's criteria while also adhering to a "trade-at" requirement and allowing exemptions for block-sized orders.

Throughout the pilot, FINRA and various U.S. stock exchanges published a daily list of Pilot Securities, indicating which securities were assigned to each pilot group. The program aimed to improve the liquidity of smaller-cap stocks by increasing their tick sizes from $0.01 to $0.05.

The Tick Size Pilot Program revealed a complex picture regarding the impact of wider tick sizes on market liquidity and trading behavior for small-cap stocks. While there were slight improvements in liquidity for some stocks, the results were mixed overall and suggested that blanket policies may not be effective for all market segments.