NSE Lowers Tick Size For Stocks Priced Under Rs 250 To Enhance Liquidity

All securities, excluding exchange-traded funds, available in the EQ, BE, BZ, BO, RL, and AF series with a stock price below Rs 250 will have a tick size of Rs 0.01, the exchange said

The tick size decided for securities in T+1 settlement will also apply to T+0 securities

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The National Stock Exchange (NSE) announced that it is introducing one paisa tick size for all the stocks in the price range of Rs 250 and under. The new tick size will be applicable from June 10, 2024, the exchange informed.

This development comes amidst an effort to increase liquidity and improve price discovery by making room for much more precise price adjustments, reported PTI. Currently, the tick size for the stocks is five paise and this has been now reduced to 1 paisa.

The exchange said that all the securities, excluding exchange-traded funds, available in the EQ, BE, BZ, BO, RL, and AF series with a stock price below Rs 250 will have a tick size of Rs 0.01, rather than the current tick size of Rs 0.05.

The tick size settled for securities in T+1 settlement will also apply to T+0 securities, the exchange shared via a circular. The tick size represents the minimum price increase between the consecutive bid (buy) and offer (sell) prices. A lower tick size makes more room for accurate price adjustments and price discovery.

For instance, if a stock has the tick size of Rs 0.10 and it was last traded at the price of Rs 50, the next possible bid prices for the stock would be Rs 49.90, Rs 49.80, Rs 49.70, etc. In such an instance, the bid prices of Rs 49.85 or Rs 49.92 wouldn’t be permitted, as they don’t match the requirement of Rs 0.10 tick size.

The tick sizes will remain subject to review and adjustments on a monthly basis, based on the closing price on the last trading day of the month, the exchange stated.

The NSE also shared revisions in the Futures & Options (F&O) segment and said that the stock futures would have the same tick size as the one in securities in the cash market segment from July 8.