NSE To Announce 1 Paisa Tick Size For Stocks Below Rs.250

The National Stock Exchange(NSE) is set to launch one paisa tick size for the stock priced below Rs.250 per share. The current tick size for these stocks is 5 paise, which will now be reduced to one paisa according to the circular of NSE. The exchange has further mentioned that the circular will be effective from June 10, 2024.

What is a Tick Size?

A tick size represents the smallest allowable price movement between consecutive bid (buy) and offer (sell) prices in a stock market. A smaller tick size enables more precise price adjustments and can enhance price discovery.

For instance, if a stock has a tick size of Rs.0.05 and the last traded price (LTP) was Rs.40, the next possible bid prices could be Rs.39.95, Rs.39.90, Rs.39.85, etc. In this scenario, bid prices like Rs.39.88 or Rs.39.93 are not valid here because they do not conform to the tick size requirement of Rs.0.05.

NSE Circular

NSE in its circular has said that “All securities, (excluding the Exchange Traded Funds(ETF)) available in ‘EQ’, ‘BE,’ ‘BZ’, ‘BO’, ‘RL’, ‘AF’ series (and their corresponding ‘BL’ series as applicable) with security price below Rs 250 will have a tick size of Rs 0.01 as against the current tick size of Rs 0.05.” 

The circular further mentions that The tick size determined for securities in the T+1 settlement will also apply to the T+0 settlement and the circular will be effective from the trade date of June 10, 2024. The tick size for the same will be determined based on the latest closing price available for securities on May 31, 2024.

Conclusion: The street foresees that this change will make NSE’s pricing more competitive with the BSE, which adopted a one paisa tick size for stocks below Rs.100 in March last year. The adjustment is expected to create a more efficient trading environment, enhancing both price discovery and market liquidity. The circular as mentioned will be effective from the trade date of June 10, 2024.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.