Mumbai, 24 May
KHUSHBOO TIWARI
Stock brokers have welcomed
the move by the National Stock
Exchange (NSE) to reduce tick size — or
the minimum price movement
possible — to one paisa for the stocks
priced below250. Effective June10,
the tick size for the cash segment and their corresponding futures will be
reduced from the current5 paise to
one paisa.
Tick size refers to the least
possible reduction or increase in the
stock price. For instance, if the share is
trading at¥100, the next possible
level for buying it would now be
%100.01instead 0f¥100.05 which is followed currently.
Stock brokers said the change will
enhance liquidity and price discovery,
lower costs, and boost trading
volumes.
"By aligning the tick size
with the underlying security prices,
NSE is fostering a more competitive
trading environment. This change will
facilitate tighter spreads and encourage active market making,
which is beneficial for both retail and
institutional investors," said Teja's
Khoday, Co-founder &CEO, FYERS.
The stock exchange said that twill review the tick size on a monthly
basis. "With current tick sizes,
low-priced stocks might experience
largerjumpsin price due to limited
increments. Lower tick sizes can
smoothen price movements, leading
toa more accurate reflection of underlying value," said Sarvjeet
Singh Virk, MD and co-founder,
Shoonya by Finvasia.
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