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Under Inspection, Subpennies Get a Boot

Traders Magazine, March 2004

Gregory Bresiger

The frequency of subpenny trading and the level of subpenny clustering are about the same at all price levels. That's one of the conclusions of a memorandum from a study by the Securities and Exchange Commission's Office of Economic Analysis. The study also found that subpenny trades tend to cluster on the one-tenth penny and nine-tenth penny price points. "The data show that the overall frequency of subpenny trades and the level of sub-penny clustering is approximately the same at all price levels," according to the SEC. "For example, 10.5 percent of trades priced less than $1.00 were executed in subpenny increments compared to 11.5 percent of trades priced greater than $60."

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