Sub-Penny Rule

What this video covers

• The purpose of the Sub-Penny Rule and how it applies to NMS stocks, bids, offers, orders, and indications of interest (IOIs)
• The five categories bound by the rule: national securities exchanges, national securities associations, alternative trading systems, vendors, and broker-dealers
• Why displaying, ranking, or accepting a prohibited bid, offer, order, or IOI creates a violation, even when the order is never displayed
• How to apply the pricing tiers: $0.0001 below $1 per share, $0.01 at or above $1 when the spread is above $0.015, and $0.005 when the spread is at or below $0.015
• Why the upper pricing tier is determined by the stock's spread rather than by the individual order
• How the time-weighted average quoted spread is measured, including the January through March and July through September evaluation periods and their operative dates
• Why the rule does not name an execution price, how a sub-penny execution can occur, and why a newly listed NMS stock starts at a penny for prices at or above $1