Pilot Program for Wider Stock Increments Backed at House Hearing
This article is for subscribers only.
Exchange operator NYSE Euronext and brokers Cowen Group Inc. and Knight Capital Group Inc. told a congressional panel they support a pilot program to increase the minimum-price increment for smaller, less-active stocks as a way of spurring trading.
Wider price increments would drive market makers to supply bids and offers for more shares, making it easier for mutual funds and other asset managers to buy or sell without moving prices, executives said. That, in turn, would boost investment in smaller firms, they said. The current minimum 1-cent increment is a one-size-fits-all approach that doesn’t make sense for all companies, according to Kevin Cronin, global head of equity trading at Atlanta-based Invesco Ltd.