May 27 (Punjab Khabarnama) : The National Stock Exchange (NSE) has decided to introduce one paisa tick size for all shares below the trading price of Rs 250 per share. NSE gave this information in a circular on 24 May. This rule will come into effect from June 10.
‘Tick size’ refers to the minimum price difference between two consecutive bid and offer prices. At present the ‘tick size’ for these shares is five paise, which will be reduced to one paise. This can be seen as a step towards better price discovery, which also reflects the intense competition between NSE and BSE exchanges for market dominance.
Tick size is the basic difference in price that exists between two consecutive bid and offer prices. According to the NSE circular, all securities under EQ, BE, BZ, BO, RL and AF series, except ETFs, will have their tick size changed from the earlier tick size of five paise. The tick size for securities under T+1 settlement will also be applicable for T+0 settlement (Series T0), the NSE circular said.
NSE informed that the tick size will be subject to review and adjustment every month based on the closing price of the last trading day of the month. Stock futures will also have the same tick size from July 8 as applicable in the cash market segment and the revision in tick size will be applicable for all expiries i.e. near-month, middle-month and far-month, NSE said in a circular. Last year, BSE had reduced the ‘tick size’ for shares trading below Rs 100 from five paise to one paise.
Merger proposal with BSE-NSE canceled
Bombay Stock Exchange (BSE) canceled the merger of its unit India INX at GIFT City IFSC with NSE IX. Sources related to this incident gave this information. He says that BSE and NSE were talking about this merger for about a year, but there was no result.
An official associated with the development said, ‘The talks related to merger were in the initial stage. Since it was taking a lot of time and there was no end in sight. Therefore, it was decided not to pursue this plan and concentrate elsewhere.