NSE Introduces One Paisa Ticket Size for Stocks Under Rs 250 Effective June 10

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NSE to Launch One Paisa Ticket for Stocks Below Rs 250 from June 10

Team FS

27/May/2024

Key Points:

NSE to reduce ticket size from 5 paise to one paisa for stocks below Rs 250 starting June 10.
The change will enhance price discovery, ensuring more accurate pricing for buyers and sellers.
The new ticket size will apply to both T+1 and T+0 settlements, with stock futures adopting the same from July 8.

The National Stock Exchange (NSE) has announced a significant change aimed at improving price discovery for investors. Starting June 10, the NSE will introduce a one paisa ticket size for stocks trading below Rs 250 per share, as detailed in a recent circular.

Understanding the Ticket Size Change

Ticket size refers to the minimum price difference between the bids and offers in the stock market. Currently, the ticket size is at least 5 paise, meaning the smallest increment or decrement in the trading price of a stock is 5 paise. However, with the new measure, this will be reduced to one paisa, providing more precise pricing and better opportunities for investors.

Benefits of the One Paisa Ticket Size

The primary benefit of reducing the ticket size is enhanced price discovery. This means that buyers and sellers can negotiate prices that more accurately reflect the market value of the stock. For example, under the current system, if a seller wants to sell shares at Rs 199.98, the transaction would typically occur at either Rs 199.95 or Rs 200. With the new one paisa ticket size, the deal can be executed precisely at Rs 199.98, ensuring that both parties get a fairer deal.

Implementation and Review Process

According to the NSE circular, the new ticket size will apply to both T+1 and T+0 settlements. In the T+1 settlement system, transactions are settled one business day after the trade, while T+0 settlement means the transactions are settled on the same day. This adjustment aims to standardize and simplify the trading process across different settlement cycles.

The NSE has also stated that the ticket sizes will be reviewed and adjusted monthly. This review will be based on the closing price of the last trading day of the month, ensuring that the ticket size remains relevant and reflective of current market conditions.

Extension to Stock Futures

In addition to spot trading, the NSE circular indicates that the same one paisa ticket size will be applied to stock futures starting July 8. Stock futures are contracts to buy or sell a stock at a predetermined price on a future date. The introduction of a one paisa ticket size in this market segment will also aid in better price discovery and more precise trading.

Conclusion

The NSE's decision to reduce the ticket size from 5 paise to one paisa for stocks below Rs 250 per share marks a significant step towards improving market efficiency. This change will directly benefit investors by enabling more accurate price discovery and fairer trading practices. By extending this measure to both spot trading and stock futures, the NSE is demonstrating its commitment to enhancing the trading environment for all market participants.

With the implementation set for June 10, investors and traders can look forward to a more refined and efficient trading experience. The monthly review and adjustment of ticket sizes will ensure that this new system remains adaptive to market dynamics, further strengthening the reliability and transparency of the NSE.

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