Rule 612 of Regulation NMS

Since the adoption of Rule 612 of Regulation NMS in 2005, there has been a significant increase in trading volume related to NMS stocks that are restricted by the minimum pricing increment under the rule.

The new rule amendments:

• revise the minimum pricing increments (also referred to as tick sizes) under Rule 612 of Regulation NMS, establishing a variable minimum pricing increment model that would apply to quoting and trading of NMS stocks, which are stocks listed on a national securities exchange, no matter the trading venue
• determine the tick size for all NMS stocks based on the Time Weighted Average Quoted Spread for the relevant NMS stock during as specified three-month Evaluation Period and assigned for a six-month period from then on
• 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

Rule 610 of Regulation NMS

The SEC’s revisions to Rule 610 of Regulation NMS reflect the new, lower minimum pricing increment under Rule 612 and address distortions associated with access fees and rebates under the existing access fee caps. The updates also cover potential conflicts of interest and increase the transparency of exchange fees, rebates, and other forms of remuneration.

The amendments also would:

• decrease the access fee caps under Rule 610 of Regulation NMS
• reduce the minimum pricing increments
• require national securities exchanges to make the amounts of all fees and rebates measurable at the time of execution
• reduce the access fee caps for protected quotations in NMS stocks that are priced $1.00 or more to $0.001 per share. The access fee cap will be 0.1 percent of the quotation price per share for protected quotations in NMS stocks priced less than $1.00 per share.

The rulemaking would expedite the availability of information about the best prices for smaller-sized orders. The rules also would accelerate the implementation of the round lot and odd-lot information definitions adopted in 2020 under the Market Data Infrastructure Rules (MDI Rules). Finally, the update to the odd-lot information definition would require the identification of the best odd-lot order, which is an order for the purchase or sale of an NMS stock in an amount less than a round lot.

For more information, please see the related final rule and fact sheet on sec.gov. The amendments go into effect 60 days following 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.

Source:

SEC Adopts Rules to Amend Minimum Pricing Increments and Access Fee Caps and to Enhance the Transparency of Better Priced Orders (sec.gov)