Does every market trading NMS stocks have to accept sub-penny orders priced less than $1.00?
No. The Rule is permissive rather than mandatory in this respect; any market may accept a sub-penny order priced below $1.00 per share, but is not required to do so. Currently, the NASD and national securities exchanges generally require a minimum pricing variation (MPV) on their markets of $0.01. Therefore, if a market wished to offer the ability to accept orders and quotations in sub-pennies below $1.00, it would first have to amend its MPV rules. Question 7: Assume that an exchange’s rules stipulate an MPV of $0.01 in all cases, including quotations and orders priced below $1.00. May the exchange nevertheless accept orders priced in sub-pennies below $1.00, rounding them appropriately to conform to the exchange’s rules? Answer: Yes. The Rule does not require the exchange to reject an order that is permissible under the Rule. However, if the exchange wants to accept such orders it must have a procedure established by rule. Specifically, the exchange may round order prices away to the
Related Questions
- What minimum price increment, if any, will apply to orders, quotations, and indications of interest in stocks other than NMS stocks?
- May an exchange also accept and round orders in NMS stocks that are explicitly priced in sub-penny increments above $1.00?
- Why are market openings particularly volatile, especially for stocks trading in fast markets?
