New Delhi, National Stock Exchange (NSE) has decided to introduce a penny tick size for all stocks priced below Rs 250 from June 10 to increase liquidity and improve price discovery by allowing more precise price adjustments. .
At present the tick size for these shares is five paise, which will be reduced to one paise.
"All securities (except exchange-traded funds) available in EQ, BE, BZ, BO RL and AF series with security value less than Rs 250 will have tick size R of 0.01, while the current tick size is Rs 0.05. Tick size fixed The same for securities in T+1 settlement will also be applicable for T+0 settlement (Series T0),'' NSE said in a circular.
Tick size is the minimum price increase between consecutive bid (buy) and off (sell) prices. A smaller tick size allows for better price adjustments and potentially more accurate price discovery.
For example, if the tick size of a stock is Rs 0.10 and the last traded price (LTP) was Rs 50, the next possible bid prices would be Rs 49.90, Rs 49.80, Rs 49.70 and so on. In this case, bid prices like Rs 49.85 or Rs 49.92 are not allowed, as they do not meet the Rs 0.10 tick size requirement.
The exchange said the tick size will be subject to review and adjustment every month based on the closing price of the last trading day of the month.
Apart from the changes in the capital markets (CM) segment, NSE has announced amendments in the futures and options (F&O) segment.
The exchange said stock futures will have the same tick size applicable for securities in the cash market segment from July 8. Further revisions in tick size will be applicable for all expiry dates – near-month, mid-month and far-month.
Last year, rival exchange BSE had reduced the tick size from 5 paise to 1 paise for stocks trading below R100.
At present the tick size for these shares is five paise, which will be reduced to one paise.
"All securities (except exchange-traded funds) available in EQ, BE, BZ, BO RL and AF series with security value less than Rs 250 will have tick size R of 0.01, while the current tick size is Rs 0.05. Tick size fixed The same for securities in T+1 settlement will also be applicable for T+0 settlement (Series T0),'' NSE said in a circular.
Tick size is the minimum price increase between consecutive bid (buy) and off (sell) prices. A smaller tick size allows for better price adjustments and potentially more accurate price discovery.
For example, if the tick size of a stock is Rs 0.10 and the last traded price (LTP) was Rs 50, the next possible bid prices would be Rs 49.90, Rs 49.80, Rs 49.70 and so on. In this case, bid prices like Rs 49.85 or Rs 49.92 are not allowed, as they do not meet the Rs 0.10 tick size requirement.
The exchange said the tick size will be subject to review and adjustment every month based on the closing price of the last trading day of the month.
Apart from the changes in the capital markets (CM) segment, NSE has announced amendments in the futures and options (F&O) segment.
The exchange said stock futures will have the same tick size applicable for securities in the cash market segment from July 8. Further revisions in tick size will be applicable for all expiry dates – near-month, mid-month and far-month.
Last year, rival exchange BSE had reduced the tick size from 5 paise to 1 paise for stocks trading below R100.
