An Update to our Tick Reform Proposal

Adam Inzirillo
March 6, 2023

Adam Inzirillo, Senior Vice President, Head of North American Equities, Cboe Global Markets, sent the following note to clients about Cboe's perspective on tick reform.

I hope you’re doing well and are excited to be one step closer to Spring and, hopefully, warmer weather. I’m reaching out to let you know that Cboe® recently submitted into the Securities and Exchange Commission’s (SEC) comment file for the Proposal on Regulation NMS: Minimum Pricing Increment, Access Fees and Transparency of Better Priced Orders, a re-introduction of the tick framework we proposed last year with refreshed data from fourth-quarter 2022.

As you may recall, our tick reduction framework objectively identified tick-constrained securities and showed that applying a ½ cent tick to those securities would allow the marketplace to more safely understand and process the implications of tick reform before making sweeping changes that could introduce operational complexity and risk. The refreshed framework is flexible, with parameters that can be adjusted to increase the number of identified symbols.

In our view, starting with a set of truly tick-constrained securities and using empirical data to evaluate the results before expanding the tick size reform to additional symbols or trading is the most pragmatic approach. Ultimately, we believe this will protect equity market structure and better insulate investors and issuers from any unintended negative consequences. As such, we are advocating for any reforms to be measured, evidence-based and truly beneficial to all investors.

We intend to comment more extensively on the proposal at a later date; in the meantime, I encourage you to read the updated framework and share your feedback. We take immense pride in the trust customers and investors put in Cboe and are committed to ensuring the U.S. has fair, competitive, robust and resilient markets that are inclusive of all investors. As always, please don’t hesitate to reach out to me or a member of our team to share your thoughts and questions.