What is the Tick Size Pilot Program?
The Securities and Exchange Commission (SEC) partnered with FINRA to implement the Tick Size Pilot Program (TSPP). The TSPP started on October 3rd, 2016 and will last for two years.
TSPP is a data-driven test evaluating whether or not widening the tick size for small cap stocks impacts trading, liquidity, and market quality. The SEC’s goal for this test is to improve execution quality for small cap companies. TSPP typically affects low priced stocks with low trading volumes.
How does it affect me?
TSPP stocks only accept orders in $0.05 increments. Robinhood will prevent you from placing orders for TSPP stocks that are not in $0.05 increments.
The list of TSPP stocks is updated daily. We will cancel any open order for a stock that is selected for the TSPP if it isn’t in a $0.05 increment. We will send you an email if your order is canceled.
How does it work?
TSPP will segregate small cap companies into four groups.
The control group will be quoted and trade at their current tick size increment.
The first test group will be quoted in $0.05 increments, but will continue to trade at their current price increment.
The second test group will be quoted and trade in $0.05 increments, but will allow certain exemptions for executions.
The third test group will trade like the second test group, but it will be subject to more requirements.
You can find a list of TSPP stocks here.
You can find more information on the TSPP here.