Failure of SEC tick size pilot points to regulator weakness

Author: John Crabb | Published: 30 Nov 2018

The Securities and Exchange Commission (SEC) won’t be extending its tick size pilot programme amid criticism that there are few benefits from widening minimum quoting and trading increments. The system will expire on October 2.

The effort and cost of implementing the pilot, ostensibly a failed experiment, shows the depth of problems at the Commission and other regulators who are put under pressure to make regulatory changes for their own sake, suggest sources. 

The pilot started in October 2016 and was intended to last two years. It was originally introduced to help improve market quality, but most agree that it has not done so and, rather, created additional costs for investors.

"The results of the pilot show clear additional cost to investors, and there has been no evidence of any compensating benefit," said David Mechner, chief executive of Pragma Securities. "I expect this is why the SEC chose...