Half-Penny Tick Sizes Are Exempted Until November 2027, Not Live This November

Wednesday, September 30, 2026 is the last day of a July-through-September window that Rule 612 of Regulation NMS names by that exact span. The section says a measurement taken across those three months sets the minimum pricing increment that goes operative on the first business day of the November that follows. Read the section by itself and the conclusion looks clean: the spread that desks produced this quarter decides whether their stocks quote in pennies or in half pennies starting Monday, November 2.

That conclusion is wrong, and what makes it wrong is not inside the section. It sits in two Commission orders that leave the regulation's text exactly as printed while moving the date on which anyone has to obey it. The threshold at the center of the whole arrangement is $0.015. What follows traces that one figure from the definition that computes it, through arithmetic that can land the same stock on either side of it, to the calendar question of which July-through-September window is the first whose answer a quoting engine will actually have to honor.

The Number the Rule Tests, and the Clock That Weights It

The operative prohibition in eCFR, 17 CFR 242.612, Minimum pricing increment is addressed to venues and to the firms that feed them. No exchange, association, alternative trading system, vendor, broker or dealer “shall display, rank, or accept from any person a bid or offer, an order, or an indication of interest in any NMS stock in an increment smaller than required pursuant to either paragraph (b)(2)(i) or (ii) of this section if that bid or offer, order, or indication of interest is priced equal to or greater than $1.00 per share”. Two branches follow. The first sets “$0.01, if the Time Weighted Average Quoted Spread for the NMS stock during the Evaluation Period was greater than, $0.015; or” and the second sets “$0.005, if the Time Weighted Average Quoted Spread for the NMS stock during the Evaluation Period was equal to or less than $0.015”.

Read the condition carefully. It attaches to the price of the bid, offer, order or indication of interest, not to the last sale of the stock. A separate branch covers the other side of the dollar line. Paragraph (b)(3) bars the same list of venues and firms from displaying, ranking or accepting “from any person a bid or offer, an order, or an indication of interest in any NMS stock priced in an increment smaller than $0.0001 if that bid or offer, order, or indication of interest is priced less than $1.00 per share”. And a fourth branch handles arrivals. Under paragraph (c), “Any security that becomes an NMS Stock during an operative period as described in paragraph (b)(1) of this section shall be assigned a minimum pricing increment of $0.01 for bids or offers, orders, or indications of interest priced equal to or greater than $1.00 per share”. A fresh listing is a penny name for the remainder of the window no matter how tight it quotes.

So the whole assignment turns on one measured quantity. Rule 612(a)(2) defines Time Weighted Average Quoted Spread as “the average dollar value difference between the NBB and NBO during regular trading hours where each instance of a unique NBB and NBO is weighted by the length of time that the quote prevailed as the NBB or NBO”. Three of those terms are defined elsewhere. In eCFR, 17 CFR 242.600, NMS security designation and definitions, paragraph (b)(88) fixes the clock: regular trading hours means “the time between 9:30 a.m. and 4 p.m. Eastern Time, or such other time as is set forth in the procedures established pursuant to § 242.605(a)(3)”. That trailing clause matters on a shortened session, and it is part of the definition rather than a gloss on it.

The national best bid and national best offer are defined at paragraph (b)(60) of the same section, and that definition carries a proviso worth reading whole: “provided, that in the event two or more market centers transmit to the plan processor, a competing consolidator or a self-aggregator identical bids or offers for an NMS security, the best bid or best offer (as the case may be) shall be determined by ranking all such identical bids or offers (as the case may be) first by size (giving the highest ranking to the bid or offer associated with the largest size), and then by time (giving the highest ranking to the bid or offer received first in time)”. The measured spread is therefore a consolidated quantity, not the spread on any one book, and the same principle that governs which band a stock is inside also governs how a limit state band is computed from a reference price rather than from a print.

Put the clock and the calendar together and the weighting base becomes concrete. A regular session runs 6.5 hours, which is 23,400 seconds. The July-through-September 2026 window spans 92 calendar days and 66 weekdays; subtracting Friday, July 3 and Monday, September 7 leaves 64 trading days. Multiply and the Evaluation Period offers 1,497,600 seconds of quote time to weight. Each distinct pairing of a national best bid with a national best offer earns its share of that total.

Two Averages of One Session, Opposite Branches

Here is where the same stock produces two answers. Take a single session in which the consolidated quote is one cent wide for 6.0 hours and three cents wide for the remaining 0.5 hours. Weighted by time, as the definition requires, the average is (6.0 multiplied by $0.01, plus 0.5 multiplied by $0.03) divided by 6.5, which is $0.075 divided by 6.5, or $0.0115. That figure is below $0.015, so paragraph (b)(2)(ii) applies and the stock quotes in half pennies.

Average the two quote states instead of the time they held, and the same session gives ($0.01 plus $0.03) divided by 2, which is $0.02. That figure is above $0.015, so paragraph (b)(2)(i) applies and the stock quotes in pennies. One session, two quotes, and a result that flips branches depending on whether the divisor is time or count. The word doing the work is “weighted” in the definition, and a figure computed another way is not what paragraph (b)(2) tests.

The boundary itself is written to fall one way. A stock one cent wide for 3.25 hours and two cents wide for 3.25 hours produces ($0.0325 plus $0.065) divided by 6.5, which is $0.015 exactly. Paragraph (b)(2)(ii) reads “equal to or less than” and paragraph (b)(2)(i) reads “greater than”, so the exact threshold takes the half penny, not the penny.

One more piece of arithmetic is worth keeping separate from the rule. A penny-wide quote of $10.00 against $10.01 has a midpoint of $10.005. A quote of $10.00 against $10.015 has a midpoint of $10.0075, three quarters of a cent. Sub-penny midpoints are an arithmetic consequence of any spread that is not an even number of ticks, and the objects of the prohibition in paragraph (b)(2) are a bid or offer, an order, and an indication of interest. That distinction between what a venue may display and what a trade may show is the same one that separates an odd lot that prints and adds to volume from one that sets the last sale.

Three Novembers for One Phrase

Rule 612(b)(1)(ii) says the increment from the second window is operative on “The first business day of November for the Evaluation Period from July through September and continue through the last business day of April of the next calendar year”. The phrase “first business day of November” then appears twice more, in two Commission orders, meaning a different year each time.

Start with the Commission's own guidance. SEC, Tick Sizes: A Small Entity Compliance Guide, last reviewed on November 21, 2024, states plainly: “The compliance date will be the first business day of November 2025, and the first Evaluation Period will be from July through September of 2025.” That date was Monday, November 3, 2025. The page still carries it.

It was superseded before it arrived. In Federal Register, Order Granting Temporary Exemptive Relief (Release No. 34-104172), dated October 31, 2025 and published at 90 FR 51418, the Commission granted relief “from compliance with Rules 600(b)(89)(i)(F), 610(c), and 612, as amended in the Adopting Release until the first business day of November 2026”. That moved the live date to Monday, November 2, 2026.

Then it moved again. In Federal Register, Order Granting Temporary Exemptive Relief (Release No. 34-105656), dated June 11, 2026 and published at 91 FR 36022, the Commission ordered that it “grants exemptive relief, as set forth in this order, from compliance with Rules 600(b)(89)(i)(F), 610(c), and 612, as amended in the Adopting Release until the first business day of November 2027”. The stated purpose was “to allow for an orderly implementation of these Rules in light of other regulatory initiatives scheduled for the balance of 2026”. The new date is Monday, November 1, 2027, which is 397 days after today.

Now line the windows up against that date. The window generated by the July-through-September 2026 measurement runs from Monday, November 2, 2026 through Friday, April 30, 2027, which is entirely inside the relief. The window generated by the January-through-March 2027 measurement runs from Monday, May 3, 2027 through Friday, October 29, 2027, also entirely inside the relief. Relief lapses on Monday, November 1, 2027, the next business day after October 29. That is the first day of the window generated by the July-through-September 2027 measurement. The relief therefore lapses on the first day of an operative window rather than in the middle of one, though the order gives its reason as orderly implementation, not calendar alignment. The first Evaluation Period whose assignment a desk must honor is July through September of 2027, not the one closing today.

What the Relief Reaches and What Stands

The grant is addressed to three sets of parties. The order says the Commission “is providing temporary exemptive relief until the first business day of November 2027: (1) … trading centers from complying with Rule 610(c), as amended in the Adopting Release; (2) … national securities exchanges, national securities associations, alternative trading systems, brokers and dealers, from complying with Rule 612, as amended in the Adopting Release; and (3) … primary listing exchanges and applicable plan processors from complying with Rule 600(b)(89)(i)(F) of Regulation NMS, as adopted in the Adopting Release.” Each elision is the same section 36(a)(1) recital, joined by Rule 610(f) in branch (1) and Rule 612(d) in branch (2). What the orders operate on is compliance, and the regulation's printed text stands exactly as amended, carrying its own citation, 89 FR 81774, Oct. 8, 2024, from the adopting release at Release No. 34-101070, 89 FR 81620.

Describing what MEMX had asked for, the June 2026 order says the request “would delay implementation of the amendments to Rule 610(c) to: (a) protected quotations and other best bids and offers in those NMS stocks that would continue to be subject to a $0.01 minimum pricing increment pursuant to Rule 612(b)(2)(i), and (b) protected quotations and other best bids and offers in NMS stocks that are priced below $1.00”. The conditional “would continue” places that penny after the relief lapses, not during it.

One question the text raises and both orders address only in passing is whether a primary listing exchange is measuring anything right now. Rule 612(a)(1)(ii) describes the second window as “The three months from July through September of a calendar year during which the Time Weighted Average Quoted Spread of an NMS stock shall be measured by the primary listing exchange to determine the minimum pricing increment for each NMS stock”, so the measuring duty lives inside the amended section that the relief covers. The body of each order records that the Commission “considered the date by which the Time Weighted Average Quoted Spread can be calculated during an Evaluation Period”, and footnote 30 of the October 2025 order adds the pointer, “See Adopting Release, supra note 1 at 81680”. That page was not read for this piece, and the measurement question is left open below rather than resolved here.

Concrete Framework

Four checks turn any half-penny claim into something verifiable.

First, ask which document supplies the date. A compliance date printed in a guide is a statement about a moment in time, and the guide reviewed on November 21, 2024 predates both exemptive orders. The current answer lives in Release No. 34-105656, not in the guide and not in the section.

Second, ask which Evaluation Period the claim relies on. A window only matters if its operative span starts on or after Monday, November 1, 2027. July through September of 2026 and January through March of 2027 both generate spans that close before that day, so measurements taken in them describe assignments that expire unused.

Third, ask how the average was computed. A spread average weighted by seconds and a spread average weighted by quote count are different statistics, and $0.0115 against $0.02 on the same session is the size of the gap they can open. Only the time-weighted figure is the one paragraph (b)(2) tests against $0.015.

Fourth, ask what the number is a property of. The dollar condition attaches to the price of the order, so an order at $0.9999 sits in the $0.0001 branch under paragraph (b)(3) regardless of where the stock last traded, and a new listing sits in the $0.01 branch under paragraph (c) regardless of how tightly it quotes.

What Would Invalidate This

The adopting release, Release No. 34-101070 at 89 FR 81620, was not opened for this piece. Its pages are cited only as the two exemptive orders describe them. If the Commission's discussion at page 81680 states that the measuring obligation in Rule 612(a)(1)(ii) runs on a schedule independent of the compliance relief, then exchanges are computing a Time Weighted Average Quoted Spread across the window closing today for an assignment that lapses unused, and the practical reading of the July-September 2026 window changes from dormant to computed-but-shelved.

No primary listing exchange rulebook or tick-size assignment file was opened. Whether NYSE, Nasdaq or Cboe are in fact measuring during the current window while relief is in force is unconfirmed, and an exchange notice stating otherwise would settle the paragraph above directly.

The treatment of a midpoint-pegged order under paragraph (b)(2) was not traced to a primary source. The arithmetic showing a $10.0075 midpoint stands on its own, but whether such an order is an order “priced” at a sub-penny for purposes of the prohibition is a question the adopting release may answer and this piece does not.

Finally, the November 1, 2027 date holds only until the next order. Relief was extended twice in under a year, from Monday, November 3, 2025 to Monday, November 2, 2026 and then to Monday, November 1, 2027, each time on a finding about implementation load. A third order would move the first live Evaluation Period from July through September of 2027 to a later window, and the check that catches it is the same one that caught this: read the orders, not the compliance guide.