Micro Moves: How $0.005 Increments Are Revolutionizing US Stocks and ETFs
- stocks will be reduced to $0.005 (0.5 cents, approximately 6 won), leading to a decrease in trading costs for investors.
- Securities and Exchange Commission (SEC) has unanimously approved a change in the bid/ask spread rules applicable to U.S.-listed stocks and exchange-traded funds (ETFs).
- The new quote system aims to reduce transaction costs by decreasing the difference between bid and ask prices (buying spreads).
US Stock Market to Introduce New Quote Unit, Reducing Trading Costs
Starting next year, the quote unit for U.S. stocks will be reduced to $0.005 (0.5 cents, approximately 6 won), leading to a decrease in trading costs for investors.
The U.S. Securities and Exchange Commission (SEC) has unanimously approved a change in the bid/ask spread rules applicable to U.S.-listed stocks and exchange-traded funds (ETFs). The new rules will take effect in November next year, introducing a “dual quote system” that uses both $0.01 and $0.005 quotes.
The new quote system aims to reduce transaction costs by decreasing the difference between bid and ask prices (buying spreads). According to the SEC, the $0.005 bid and ask price will be applied to approximately 1,788 stocks based on trading patterns last year.
The cap on the commission that major stock exchanges such as the New York Stock Exchange and Nasdaq can charge for individual trading has also been reduced from $0.3 (30 cents) per 100 shares to $0.1 (10 cents). This change is expected to further reduce trading costs for investors.