medium · Market Microstructure
A trader attempts to submit a limit buy order for 500 shares of a stock currently trading at $0.8540 with a proposed price of $0.8541.
According to the Reg NMS Sub-Penny Rule (Rule 612), how should the trading venue handle this order?
- The order is permitted because the stock price is below $1.00, allowing for increments as small as $0.0001.
- The order is permitted only if the increment is at least $0.001, making $0.8541 invalid.
- The order must be rejected because it violates the minimum 0.01 tick size applicable to all NMS securities.
- The order is permitted only if the venue is a dark pool, as lit exchanges are restricted to $0.01 increments regardless of price.
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