MFA Submits Comments to SEC Regarding Tick Size Pilot Program (with Lofchie Comment)

MFA submitted a comment letter to the SEC requesting that the comment period on a proposed Tick Size Pilot Program be extended from 21 to 60 days.

In the letter, MFA explained that the Tick Size Pilot Program is complex and raises a number of policy and "practical issues" for investors to consider. Therefore, MFA stated, additional time is needed to evaluate the program fully.

Lofchie Comment: Rather than rushing the process of evaluating the tick size program, the SEC ought to plan a series of independent programs to test different trading rules. The "trade at" test, which the SEC is conducting in concert with the tick size program, is in fact a more significant pilot project and more likely to produce a meaningful result. However, the quality of this test will be distorted by conducting it in conjunction with the tick size test, as the "trade at" test will be conducted at too wide of a spread, which will discourage market participants from attempting to beat the price shown on an exchange. A meaningful "trade-at" test should be conducted at the ordinary penny increment.

See: MFA Comment Letter; MFA Comment Letter Announcement.Related news: SEC Announces Pilot Plan to Assess Stock Market Tick Size Impact for Smaller Companies (with Lofchie Comment) (August 26, 2014); SEC Issues Order Directing FINRA and Exchanges to Develop Tick Size Pilot Program (with Delta Strategy Group Summary and Lofchie Comment) (June 25, 2014); SEC Holds Investor Advisory Committee Meeting (with Delta Strategy Group Summary) (February 4, 2014); MFA Comment Letter on SEC Decimalization Roundtable (May 6, 2013).