The US Securities and Exchange Commission planned to make small-cap stocks’ minimum trading increments much wider in order to see whether it will result to stimulation of more trading or not. However, according to the retail brokerages, this plan, which is known as the “tick size” plan, could result negatively for the mom-and-pop investors.
On Tuesday, the SEC Website posted that the TD Ameritrade Holding Corp stated in their letter, which is dated 22nd of December 2014, that the possible cost for the US Securities and Exchange Commission’s plan to the investors could go as high as $455 million yearly. A retail broker also said that the project’s potential cost to his client is from $11 million to a whopping $18.4 million.
The supporters of the SEC’s plan said that the project would help incentivizing brokerages in order to make more offers and bids. They said that it will make everything much easier for trading stocks. They also pointed out how the brokerages could use the extra profits they would get from this project for the purpose of growing their small-cap companies research, which can definitely result to making more companies to provide more job openings and to go public. Despite all these, the brokerages still think the project is flawed and that there is still a big probability that its costs will override its benefits.