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The Operating Committees of the Securities Information Processors (“SIPs”) today announced that they have issued a proposal for adding Odd Lot quotes to the UTP and CTA/CQ data feeds. The Operating Committees are actively seeking input from the industry and the public for the next forty-five days. The proposal is posted on the Consolidated Trade Association (“CTA”) www.ctaplan.com/oddlots and Unlisted Trading Privileges (“UTP”) www.utpplan.com/oddlots websites and comments received will be posted there as well.
“The reason for this proposal is simple,” said Bob Books, Chairman of the SIP Operating Committees. “Over the past several years, the U.S. equity markets have seen a significant rise in odd lot activity, which accounts for an increasing portion of U.S. equity trading volume, particularly for high-priced securities.
Given the higher levels of odd lot activity, the Participants felt the time was right to consider ways to enhance the transparency of odd lot quoting.”
Odd lot quotes are buy or sell orders for fewer shares than the standard order sizes set by the exchanges, known as round lots. For the vast majority of U.S. stocks, the round lot size is 100 shares. Quotes for odd lots of shares are not currently reported to the SIPs.
As currently constructed, the SIP Operating Committees’ proposal does not plan for the addition of odd lot quotes to change how the National Best Bid-Best Offer (“NBBO”) is calculated, nor would such quotes be considered protected quotes under Regulation NMS. The odd lot quote data would be extra data available to SIP customers who could then choose how to use it.
“As an initial step, the Participants are weighing a proposal for the SIPs to disseminate certain consolidated odd lot quotation data as ancillary information on the UTP and CTA/CQ data feeds. The Participants believe that this new data will provide market participants with important additional
information about the price and liquidity of NMS stocks, and may be valuable for retail investors who trade in smaller share amounts, particularly in higher-priced securities,” added Books.
“In addition to the meaningful performance improvements the SIPs have made in recent years, there has also been a significant movement toward greater transparency,” Books noted. “Inviting the industry and the public in at this early stage of development lets them voice their opinion on this potential enhancement to our feeds.”
The investing public is invited to view the Odd Lot Proposal and submit comments by visiting the CTA website at www.ctaplan.com/oddlots or the UTP website at www.utpplan.com/oddlots. Public comments will be accepted until November 15, 2019. Additional details are found on the web sites.
