Core terms
Tick size (minimum pricing increment)
The smallest price step in which a quote or order may be displayed, ranked or accepted. Under Regulation NMS Rule 612 it is $0.01 at $1.00 or more and $0.0001 below $1.00 in practice (as of 2026-10-05).
Rule 612 restricts quotes and orders, not trades. In the SEC's words, it "does not restrict trading in sub-penny increments", so a stock above $1 can print at a price such as $3.5875 through price improvement or a midpoint execution (Illustrative price). In the FennEdge Gapper HOD study, 97 of 671 stocks that gapped up 20% or more opened below $1.00 and quoted in $0.0001 steps (14.5%; 2026-07-01 to 2026-10-02; FennEdge archive; as of 2026-10-02).
Half-penny tick
In 2024 the SEC adopted a $0.005 increment for NMS stocks priced at $1.00 or more whose time-weighted average quoted spread was $0.015 or less in an evaluation period, with lower access fee caps (Release No. 34-101070). As of 2026-10-05, compliance for both is postponed to the first business day of November 2027 (SEC Release No. 34-105656). Thin small caps with spreads of several cents are unlikely to qualify.
Tick size sets the tightest possible spread, how displayed size spreads across price levels, and how many shares a given dollar risk needs.
What traders should verify
Compare spreads as a percentage of price and of the target, not in cents, and log fees and slippage in R by price tier (below $1, $1 to $3, above $3).
Do not conflate
The compliance date has moved twice; check the current SEC order before relying on it. A four-decimal quote does not make exits precise: a stop still fills at the next available price.
Primary source
Primary sourceRegulation NMS Rule 612, 17 CFR 242.612