National Stock Exchange (NSE) Implements One Paisa Tick Size for Stocks Below ₹250

<ul>
  <li>The National Stock Exchange (NSE) has announced a significant change in its trading parameters.</li>
  <li>This decision is detailed in a circular dated May 24, 2024, and marks a strategic move towards improving price discovery in the market.</li>
  <li>According to some market participants, this measure reflects the intense competition between the NSE and the Bombay Stock Exchange (BSE) for market dominance.</li>
</ul>
<p><strong>NSE to implement one paisa tick size for stocks under ₹250 from June 10, aiming to improve price discovery</strong></p>
<h2><strong>Introduction of One Paisa Tick Size</strong></h2>
<p>Effective June 10, 2024, the NSE will introduce a one paisa tick size for all stocks priced below ₹250 per share. This change aims to enhance trading efficiency and accuracy in price quotations. Previously, the tick size for these securities was five paise.</p>
<h3><strong>Impact on Different Securities</strong></h3>
<p>The new tick size will apply to all securities, except ETFs, listed under the EQ, BE, BZ, BO, RL, and AF series. The tick size for securities under the T+1 settlement will also be applicable for T+0 settlement (series T0), according to the circular.</p>
<h2><strong>Changes in Futures & Options Segment</strong></h2>
<p>In addition to changes in the Capital Market (CM) segment, the NSE also announced revisions in the Futures & Options (F&O) segment. The tick size for stock futures will now be linked to the underlying price in the CM segment. This change will be reviewed on a monthly basis, using the closing price on the last trading day of the month to determine the tick size for the following month.</p>
<h3><strong>Stock Options Unaffected</strong></h3>
<p>The circular emphasizes that there will be no change in the tick size of stock options due to any change in the tick size of the underlying security in the CM segment and its corresponding stock futures.</p>
<h3><strong>Conclusion</strong></h3>
<p>This adjustment is aimed at enhancing trading efficiency and accuracy in price quotations. The decision to align tick sizes with the underlying securities in the CM segment and apply these changes to stock futures reflects the NSE's commitment to maintaining a competitive and efficient trading environment, as per the circular.</p>