This change aims to improve price discovery for lower-priced stocks by allowing for more precise pricing increments. It could also lead to tighter bid-ask spreads and potentially higher trading volumes.
The new tick size applies to all cash segment stocks under Rs 250 and their corresponding stock futures, excluding stock options. The tick size for newly listed companies will be determined based on their closing price on the last trading day of the month.
This move aligns NSE with its competitor, the Bombay Stock Exchange (BSE), which already uses a 1 paisa tick size for stocks below Rs 100. While the change is expected to benefit both retail investors and traders, it may also lead to increased system load on the NSE due to the larger number of potential orders.
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