The SEC granted a limited exemption (the "Exemption") to NYSE MKT LLC ("NYSE MKT") from complying with certain requirements of the TickSize Pilot Plan under Rule 608(c) of Regulation NMS. The TickSize Pilot Plan is testing whether market making in the securities of small companies would be encouraged if the minimum tick increment was increased from one penny to five cents, which in turn would create a greater spread profit for market makers. The TickSize Pilot Plandelineates the criteria for dividing securities that will be subject to the pilot ("Pilot Securities") into a control group and three test groups, and specifies the trading rules applicable to each group (e.g., trading increments, the "trade-at" requirement, etc.). The Exemption grants the following relief to the exchange:
- NYSE MKT may move any Pilot Security that has a closing price below $1.00 from its assigned test group to the control group in order to avoid being subject to the quoting and trading requirements of the initial test group (such as trading in $0.05 increments).
- Within certain test groups, NYSE MKT is allowed to exempt members from the requirement to execute customer orders in Pilot Securities at $0.05 increments where the member otherwise is required by NYSE MKT rules to execute a customer order in a Pilot Security after executing a proprietary trade in that same Pilot Security. In such instances, the proprietary trade would have been executed at a price other than in the required $0.05 increment pursuant to an enumerated exception in the TickSize Pilot Plan.
- Within certain test groups, NYSE MKT is permitted to exempt members from the "trade-at" requirement for "stopped orders" and transactions in order to correct bona fide errors.
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