The US options industry appears to be edging ever closer to
the introduction of penny pricing, a move that could
drastically change the way business is done.
Speaking at the options industry conference in Miami Beach,
Florida last weekend, Elizabeth King, associate director with
Securities and Exchange Commission (SEC), told industry
attendees that recent studies by the regulator "suggest that
the existing nickel and dime increments are keeping spreads
artificially wide" and that pennies could narrow them.
"For these reasons, I believe that it is not a question of
whether options will be quoted in pennies, but how pennies will
be introduced to the marketplace," King said.
The evolving plan from SEC seemed to favour a gradual
rollout of penny pricing for the industry. The regulator has
been using its influence to push exchanges to offer pennies
through the inter-market options linkage plan, which requires
exchanges to provide the best price for customer trades.
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