Clarification on stocks trading above/below $1

Discussion in 'Trading' started by bellman, Apr 19, 2010.

  1. bellman

    bellman

    For any American stock exchange (NYSE, AMEX or Nasdaq), can equities trading below $1 be traded at fractions of a penny and stocks trading > $1 must trade in penny increments?
     
  2. my understanding is both above and below $1 can be traded down to a fraction of a cent. I have bought some at the fourth digit to the right of the decimal point, for instance 32.8899.

    Just my experience
     
  3. tommintj

    tommintj

    Stock Bids and offers above $1 and priced in subpenny increments cannot be accepted from retail customers due to SEC's Rule 612. Trading can be done by a broker/dealer in subpenny increments.

    See http://defendtrading.com for more info
     
  4. Interesting Tommintj.

    Why then can I buy positions with the fourth decimal point? For instance today I did a market order for C and bought it at 4.8485.

    I didnt do a limit order(when I do a limit order it wont let me enter more than 2 decimal spots), and that 4.8485 is what the market let me buy it at.

    Im not trying to "i told you so", and I interested if that is the rule then what is the reasoning as to why did I get to buy to the 4th decimal spot?
     
  5. Ummm, that was your <i>average</i> price on the fill.
     
  6. bellman

    bellman

    So I think tommintj is right as far as I can tell. Does it then stand to reason that a stock trading just above $1 is the least efficient market? The spread is nearly a full % point.