In financial markets, a tick size is the smallest increment (tick) by which the price of stocks, futures contracts or other exchange-traded instrument can move.
Tick sizes can be fixed (e.g., USD 0.01) or vary according to the current price (common in European markets) with larger increments at higher prices. Heavily-traded stocks are given smaller tick sizes. An instrument price is always a rational number and the tick sizes determine which numbers are permissible for a given instrument and exchange.
In Europe, Mifid has resulted in a variety of multilateral trading facilities with distinct tick size regimes for the same stocks. These differences mean that order routing systems must be aware of every MTF's tick size regime and adjust outgoing orders accordingly. There is now an industry effort underway to harmonise tick sizes.
Famous quotes containing the words tick and/or size:
“Time has an undertaking establishment on every block and drives his coffin nails faster than the steam riveters rivet or the stenographers type or the tickers tick out fours and eights and dollar signs and ciphers.”
—John Dos Passos (1896–1970)
“Learn to shrink yourself to the size of the company you are in. Take their tone, whatever it may be, and excell in it if you can; but never pretend to give the tone. A free conversation will no more bear a dictator than a free government will.”
—Philip Dormer Stanhope, 4th Earl Chesterfield (1694–1773)