NYSE Euronext announce is extending ‘decimalisation’ from today to an additional tranche of 71 European stocks traded on its Amsterdam, Bruss
NYSE Euronext announce is extending ‘decimalisation’ from today to an additional tranche of 71 European stocks traded on its Amsterdam, Brussels, Lisbon and Paris markets to further improve market efficiency.
Decimalisation enables the reduction of tick sizes which dramatically reduces spreads (the gap between the best bid and best ask price) making trading more efficient and reducing the implicit cost of trading for the end-investor.
Following a pilot phase earlier this year, in which Euronext introduced a tick size of either 0.005 or 0.001 to 29 blue-chip stocks across its European markets, Euronext, as from today, introduces a tick size of 3 decimals for an additional 71 stocks including the component securities of the main indices: the AEX, the BEL 20, the CAC 40 and the PSI 20 (Appendix).
Analysis of the pilot phase showed that, on average, spreads were reduced by 60%, which represents a cost saving of 8 basis points for the end-investor.
Later this year, Euronext will further extend tick sizes of 3 decimals on up to 400 stocks on its European markets.
Cees Vermaas, Executive Director, European Sales at NYSE Euronext, says, “This move is part of our continued strategy to respond rapidly to market trends and to offer our customers the most efficient and cost-effective market possible in an ever increasingly competitive environment. Within the framework of MIFID, this move will re-enforce the best execution we offer our clients.”
“It will be particularly welcome to algorithmic traders who now represent 40% of our business. Small tick sizes mean traders can get inside the spread and slice the order more finely. This encourages algorithmic trading as computers can react in milliseconds to micro-movements in price.”