Mar. 26, 2023
March 26, 2023 The following extremes appear to be broadly understood Tick Constrained: Restricts participants from improving upon the lit market which artificially magnifies size at BBO as firms opt to join BBO as opposed to improve it End result. Folks search for price improvement in more relevant trade sizes off-exchange as folks are forced to expose this price improvement off-exchange Severely Un-Tick Constrained Increases price flickering and reduces incentive to improve upon the lit market as the queue priority reward granted to a participant for improving BBO price is easily lost. End result: Folks are incentivized to expose price improvement off-exchange Both instances result in less competitive lit markets. This proposal is welcomed but half-way complete While unstated. The proposal appears to present a function form which targets an optimal number of ticks from a given input (time-weighted-average quote spread) If the commission believes 8ticks is ideal. I'd encourage them to extend this to encompass the full stock universe Given the number of comments suggesting a different optimal number of ticks. Id encourage the commission to share any insights which led them to arrive at this functional form and why they believe its only relevant for stocks trading = current tick size.