Citadel Securities Proposes Half-Penny Tick-Size Pilot to SEC

Citadel Securities has formally requested that the U.S. Securities and Exchange Commission (SEC) launch a pilot program to test the reduction of tick sizes—the minimum price increments for trading—before embarking on major market structure reforms. The proposal targets the most liquid segments of the equity market, suggesting that smaller increments could improve price discovery and execution efficiency for high-volume traders and institutional investors. Under the proposed two-year study, the SEC would select the 60 most liquid stocks and ETFs. The program would divide these assets into two groups: 30 securities would be subject to quotations in half-penny increments, while the remaining 30 would serve as a control group maintaining standard full-penny increments. If adopted, the pilot would provide the regulator with empirical data on how narrower spreads affect overall market liquidity and volatility. Such a shift could potentially lower trading costs for market makers and high-frequency traders, though the initiative remains subject to SEC approval and regulatory review.