According to a notice setting out the proposed changes, while trades on lit markets can, in certain circumstances, be executed with half a tick (trading increment) being considered as the required price improvement, dark trades always reprice by a full tick.
As a result, for securities where the spread between the bid and offer is already just one tick, these orders cannot be executed. Now, the TSX is proposing changes to allow dark orders to execute at half tick price improvements.
“By implementing half tick price improvements … we anticipate that the likelihood of small order interactions will increase, thereby improving execution rates and overall market liquidity,” the exchange said in its notice.
“We believe the proposed structure may help increase liquidity, reduce missed trading opportunities, and ensure a steady flow of trades, especially in markets where tight spreads are common,” it added.
TSX Inc….
