The US options industry appears to be edging ever closer to the introduction of penny pricing, a move that could drastically change the way business is done.
Speaking at the options industry conference in Miami Beach, Florida last weekend, Elizabeth King, associate director with Securities and Exchange Commission (SEC), told industry attendees that recent studies by the regulator "suggest that the existing nickel and dime increments are keeping spreads artificially wide" and that pennies could narrow them.
"For these reasons, I believe that it is not a question of whether options will be quoted in pennies, but how pennies will be introduced to the marketplace," King said.
The evolving plan from SEC seemed to favour a gradual rollout of penny pricing for the industry. The regulator has been using its influence to push exchanges to offer pennies through...