The National Stock Exchange (NSE) in India is set to introduce a groundbreaking change in the stock market with the launch of a one paisa ticket size for stocks below the trading price of Rs 250 per share, starting from June 10. This move comes as a part of NSE’s efforts to enhance price discovery and market efficiency for investors.
The announcement by NSE regarding the reduction in tick size from 5 paise to one paisa is a significant milestone that will impact how stocks are traded in the country. This change in ticket size will enable buyers and sellers to transact at more precise prices, ensuring that they get the best deal possible. For instance, if a person wishes to sell shares at Rs 199.98, the deal will now be executed at Rs 199.98 itself, instead of rounding off to the nearest 5 paise.
According to the circular issued by NSE, the new tick size will apply to both T+1 settlement and T+0 settlement, providing a level playing field for investors across different trading scenarios. Additionally, the tick sizes will be regularly reviewed and adjusted every month based on the closing price of the last trading day to reflect market conditions accurately.
Furthermore, from July 8 onwards, stock futures in India will mirror the tick size of the underlying security in the cash market segment. This adjustment will apply to all expiries, including near-month, middle month, and far-month contracts. This move is aimed at aligning the tick size across different trading instruments, making it easier for investors to strategize and trade effectively.
The reduction in tick size has been welcomed by market experts, who believe that it will make trading more attractive for both retail investors and traders. Arvinder Singh Nanda, Senior Vice President of Master Capital Services Ltd, highlighted that the change will empower investors to devise new strategies tailored to the smaller tick sizes, enhancing market efficiency. However, Nanda also cautioned that the increased number of smaller orders might escalate system load, necessitating robust infrastructural support from exchanges.
In conclusion, the introduction of the one paisa ticket size by NSE represents a significant milestone in the Indian stock market, offering greater precision and efficiency in stock trading. Investors can look forward to a more transparent and competitive trading environment, with enhanced opportunities to optimize their trading strategies and make informed decisions in the market.