Sub-Penny Rule (Rule 612)
Market Microstructure glossary · Limit Order Book Mechanics & Order Routing Logic
Definition
The Regulation NMS rule generally prohibiting quotations or orders at sub-penny increments for stocks priced at $1 or more (minimum tick = $0.01).
Sub-Penny Rule (Rule 612) in plain English
Stock prices in the U.S. are normally quoted in whole cents, and the Sub-Penny Rule (part of Regulation NMS) makes that official: for any stock priced at $1 or more, you generally can't quote or order at fractions of a cent like $10.00135. The point is fairness and clarity — without it, a trader could jump ahead of your $10.00 order by offering $10.0001, beating you by a meaningless sliver and cluttering the market. So the smallest legal step is one cent ($0.01). Very cheap stocks under $1 are allowed finer increments.
Also called: Rule 612
Practice Sub-Penny Rule (Rule 612)
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