Bill Overview
Title: Accurate Pricing for Investors Act
Description: This bill directs the Securities and Exchange Commission (SEC) to report on the incremental price change of a security, or the tick size, used in securities markets. Specifically, the SEC must examine whether reducing the tick size may lower costs for retail investors.
Sponsors: Rep. Huizenga, Bill [R-MI-2]
Target Audience
Population: Retail investors globally participating in U.S. securities markets
Estimated Size: 150000000
- The bill focuses on the tick size used in securities markets, which affects how prices are quoted and traded.
- Retail investors often participate in securities markets by buying and selling stocks, bonds, and other financial instruments.
- Lowering tick size could lead to reduced transaction costs for these retail investors, increasing their profitability and access to market.
- The SEC's role in the bill suggests a focus on the regulatory oversight of stock exchanges and trading platforms, which primarily affect investors participating in these markets.
- Institutional investors, while part of the market, have more sophisticated trading mechanisms and may not be as directly impacted by tick size changes as retail investors.
- Tick size affects pricing increments, potentially improving execution prices for trades for individual investors globally, especially in markets influenced by U.S. regulations due to the prominence of U.S. markets.
Reasoning
- The policy focuses on retail investors, who are directly affected by tick size changes as they engage in buying and selling securities.
- Given the budget constraints, the policy is likely to target a subset of investors or focus initially on the most heavily traded securities to maximize impact.
- Since the SEC will be leading the examination, regulatory and operational aspects will play a key role, and changes will be gradual and data-driven.
- A wide range of investors is required to be interviewed, including those who may not be immediately impacted, to understand broad market sentiment and practical realities.
- Cost limits imply that initial changes may be experimental or pilot projects, with broader implementations being dependent on demonstrated success or additional funding.
Simulated Interviews
Software Engineer (San Francisco, CA)
Age: 35 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- Any cost reduction in trading helps, as small savings add up over time.
- Concerned about the potential impact on smaller, less liquid stocks.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Accountant (Chicago, IL)
Age: 48 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 12/20
Statement of Opinion:
- I rely on my advisor, so direct changes might be limited.
- Lower costs are always beneficial, but I'm skeptical of significant changes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Freelance Designer (Austin, TX)
Age: 29 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- Improved pricing models in trading apps will directly benefit my small-scale investments.
- I hope this also improves transparency and education for small investors.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Retired (Miami, FL)
Age: 62 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 3.0 years
Commonness: 14/20
Statement of Opinion:
- Benefits are long-term for me, but I welcome any reduction in trading costs.
- I am more focused on the stability of my returns than slight cost savings.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Graduate Student (New York, NY)
Age: 23 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 6.0 years
Commonness: 18/20
Statement of Opinion:
- This could make learning to invest less intimidating and more rewarding.
- I'm excited for any improvements that make investing more accessible to beginners.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Entrepreneur (Seattle, WA)
Age: 39 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 4.0 years
Commonness: 9/20
Statement of Opinion:
- This policy seems to benefit smaller trades, which may not affect my overall strategy significantly.
- If it leads to better pricing for tech stocks, that would be an advantage.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
High School Teacher (Dallas, TX)
Age: 54 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 11/20
Statement of Opinion:
- A little nervous about changes as I'm not very savvy with these details.
- Anything that lowers costs would help me save more effectively for future needs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Civil Engineer (Boston, MA)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 2.0 years
Commonness: 10/20
Statement of Opinion:
- I think this bill could improve market efficiency, which is good for everyone.
- Eager to see if this leads to better execution for REIT trades.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Non-profit Worker (Portland, OR)
Age: 31 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 8/20
Statement of Opinion:
- I hope this leads to better transparency and pricing for sustainable stocks.
- It's great if it can encourage more people to support responsible investing.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Retired (Los Angeles, CA)
Age: 70 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 2.0 years
Commonness: 7/20
Statement of Opinion:
- My funds manage these details, so direct impact could be limited.
- Anything reducing the cost of investment management is a step forward.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 7 | 7 |
Cost Estimates
Year 1: $5000000 (Low: $3000000, High: $7000000)
Year 2: $0 (Low: $0, High: $0)
Year 3: $0 (Low: $0, High: $0)
Year 5: $0 (Low: $0, High: $0)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- The primary cost stems from the SEC allocating resources to conduct a comprehensive review and analysis of tick size adjustments.
- Long-term indirect savings might accrue to retail investors through lower transaction fees if tick size adjustments are implemented.
- Any potential regulations adopted could affect financial markets globally due to the influence of U.S. markets.
- The exact cost-savings impact on retail investors is speculative until the study provides concrete findings.