SEC Adopts Rules to Amend Minimum Pricing Increments and Access Fee Caps and to Enhance the Transparency of Better Priced Orders

The Securities and Exchange Commission today adopted amendments to certain rules under Regulation NMS to adopt an additional minimum pricing increment, or "tick size," for the quoting of certain NMS stocks, reduce the access fee caps for protected quotations of trading centers, increase the transparency of exchange fees and rebates, and accelerate the implementation of rules that will make information about the market's best priced, smaller-sized orders publicly available. The amendments are designed to reduce transaction costs and improve market quality for all investors and to help ensure that orders placed in the national market system reflect the best prices available for all investors.

"In 1975, Congress tasked the Securities and Exchange Commission with responsibility to facilitate the establishment of the national market system and enhance competition in the securities markets, including the equity markets," said SEC Chair Gary Gensler. "A lot has changed - in technology and business models - since we last took a comprehensive review of the national market system rules in 2005. Thus, it is incumbent upon us to update our national market system rules. The reforms we adopted today will help promote greater transparency, competition, fairness, and efficiency in our $55 trillion equity markets. That goes to the heart of the SEC's mission. The reforms are pro-investors. They are pro-capital formation."

Since the adoption of Rule 612 of Regulation NMS in 2005, there has been a marked increase in trading volume related to NMS stocks that are constrained by the minimum pricing increment under the rule. Many NMS stocks would likely be priced more competitively if not constrained by a market-wide minimum pricing increment of $0.01. The amendments to Rule 612 establish a new, additional $0.005 minimum pricing increment for quotations and orders in NMS stocks that are priced at, or greater than, $1.00 per share. The tick size for all NMS stocks will be based on the Time Weighted Average Quoted Spread for the relevant NMS stock during a specified three-month Evaluation Period and thereafter assigned for a six-month period.

Further, the Commission adopted amendments to Rule 610 of Regulation NMS to reflect the new lower minimum pricing increment under Rule 612, address distortions associated with access fees and rebates under the existing access fee caps, address potential conflicts of interest, and increase the transparency of exchange fees, rebates, and other forms of remuneration. The amendments reduce the access fee caps for protected quotations in NMS stocks that are priced $1.00 or more to $0.001 per share. For protected quotations in NMS stocks priced less than $1.00 per share, the access fee cap will be 0.1 percent of the quotation price per share. In addition, Rule 610 will now require exchanges to make the amounts of all fees, rebates, and other forms of remuneration determinable at the time of execution.

Finally, to expedite the availability of information about the best prices for smaller-sized orders, the Commission accelerated the implementation of previously adopted definitions related to round lots and odd-lot information. These definitions were approved by the Commission in 2020, but their implementation has been delayed. In addition, the Commission adopted an amendment to the odd-lot information definition to require the identification of the best priced odd-lot orders that are available in the market.

The amendments will become effective 60 days after the publication of the adopting release in the Federal Register. For Rule 612, Rule 610, and the round lot definition, the compliance date will be the first business day of November 2025. For odd-lot information, the compliance date will be the first business day of May 2026.