National Stock Exchange reduces tick size for select stocks to increase liquidity

New Delhi. The National Stock Exchange (NSE) has decided to make the ‘tick size’ i.e. the minimum price difference one paisa for all shares priced below Rs 250 from June 10. ‘Tick size’ indicates the minimum price difference between two consecutive bid and offer prices. At present, the ‘tick size’ for these shares is five paisa, which will be reduced to one paisa. The purpose of this move is to increase liquidity and find better value through more accurate price adjustment. NSE said in a circular, “The ‘tick size’ of all securities (except exchange-traded funds) available in the price range below Rs 250 will be Rs 0.01, whereas at present it is Rs 0.05.

The ‘tick size’ prescribed for securities in T+1 settlement will also apply for T+0 settlement (series T0).” Tick size is the smallest increment/decrease of possible price movement. For example, if the ‘tick size’ of a stock is Rs 0.05, it can move only in increment/decrease of Rs 0.05. A smaller ‘tick size’ helps in better price adjustment and potentially finding a more suitable price. The ‘tick size’ is considered, reviewed and adjusted based on the closing price of the last trading day of the month, NSE said.

Apart from the changes in the capital market segment, NSE has announced amendments in the futures and options (F&O) segment. According to the circular, futures shares will have the same tick size as applicable for securities in the cash market segment from July 8. Also, the amendment in tick size will be applicable for all expiry dates near-month, mid-month and far month. BSE had last year reduced the tick size from five paisa to one paisa for shares trading below Rs 100.

Disclaimer: CricketInFocus has not edited this news. This news has been published from PTI-language feed.

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