Bill Overview
Title: Intelligent Tick Study Act
Description: This bill authorizes the Securities and Exchange Commission (SEC) to mandate the use of larger tick sizes in the trade of the securities of emerging growth companies. Tick size is the minimum price increment of a trading instrument. Specifically, the bill authorizes the SEC to designate a tick size larger than $0.01 but not more than $0.25 for these securities. The SEC must report on the impact of potential variations in tick size for all securities.
Sponsors: Sen. Kennedy, John [R-LA]
Target Audience
Population: Individuals involved in trading or investing in securities of emerging growth companies
Estimated Size: 10000000
- The bill pertains to the stock market and securities, indicating it impacts individuals involved in stock trading.
- Specifically targets securities of emerging growth companies, affecting investors in these specific businesses.
- Professional traders and stock brokers who process transactions might also be impacted.
- The variation in tick sizes can affect pricing and liquidity which in turn impacts investors' strategy and returns.
Reasoning
- The Intelligent Tick Study Act will predominantly affect individuals and entities involved in the trading of securities, particularly those associated with emerging growth companies.
- Retail investors who invest in smaller growth-oriented companies may see changes in their trading fees and liquidity, impacting their strategy and returns.
- The policy will also affect professional traders, stock brokers, and trading firms who execute these trades, as larger tick sizes could impact market dynamics and profitability.
- Given the focused nature of the policy, it is unlikely to affect individuals outside of the investor, trader, and market participant demographic.
Simulated Interviews
retail investor (New York)
Age: 28 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- I think the policy could enhance liquidity for the stocks I trade.
- Smaller companies might benefit from increased investor interest if their stocks become more liquid.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
stock broker (Los Angeles)
Age: 35 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 12/20
Statement of Opinion:
- This policy is going to change how we price stocks, potentially increasing fees.
- I'm concerned about the adjustment period for my clients.
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 | 7 | 6 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
day trader (Chicago)
Age: 42 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- Larger tick sizes might reduce the volatility I love but could stabilize profits.
- I'll need to adjust my trading algorithms significantly.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 8 |
| Year 2 | 6 | 8 |
| Year 3 | 5 | 8 |
| Year 5 | 5 | 8 |
| Year 10 | 6 | 8 |
| Year 20 | 7 | 8 |
financial analyst (San Francisco)
Age: 50 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 4.0 years
Commonness: 10/20
Statement of Opinion:
- The change in tick size is an important variable in our models.
- It might make investments in these companies more appealing to large funds.
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 | 8 | 7 |
| Year 20 | 8 | 7 |
corporate investor (Houston)
Age: 39 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 11/20
Statement of Opinion:
- Changes like these can affect the attractiveness of initial public offerings.
- The larger tick size might either improve or deter liquidity, depending on how it is implemented.
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 | 7 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
university student (Boston)
Age: 31 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 1.0 years
Commonness: 17/20
Statement of Opinion:
- This policy seems technical but could be useful for understanding financial markets.
- Practically, I don't think it will affect my day-to-day life much.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
software developer (San Diego)
Age: 45 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- If the policy helps stabilize small stocks, that could reduce risks for my investments.
- I don't think this will affect my career in software.
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 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
retired (Miami)
Age: 59 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 13/20
Statement of Opinion:
- I invest long-term, so short-term tick changes aren't my focus.
- However, any impact on growth companies I hold could be more long-term.
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 |
entrepreneur (Seattle)
Age: 27 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 9/20
Statement of Opinion:
- The potential impact on IPO pricing is a concern.
- This policy might either attract or deter investor attention.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
stock market researcher (Phoenix)
Age: 48 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 2.0 years
Commonness: 8/20
Statement of Opinion:
- This policy provides rich data for analysis, which could generate new insights in market behavior.
- The operational aspect of brokerage might see some restructuring.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Cost Estimates
Year 1: $5000000 (Low: $4000000, High: $6000000)
Year 2: $5000000 (Low: $4000000, High: $6000000)
Year 3: $5000000 (Low: $4000000, High: $6000000)
Year 5: $5000000 (Low: $4000000, High: $6000000)
Year 10: $5000000 (Low: $4000000, High: $6000000)
Year 100: $5000000 (Low: $4000000, High: $6000000)
Key Considerations
- The exact cost of implementation will depend on the SEC's current technological infrastructure and need for upgrades.
- The long-term savings and revenue impacts are contingent on positive market responses to larger tick sizes.
- The policy may require robust communication to ensure market participants understand the changes and their implications.