Everyone here is right, this has been a topic of discussion for a long time, including devlog #346 not too long ago where this was explicitly brought up.
tl;dr yes, we need dynamic tick-size adjustments on the markets.
I talk about it here, others have talked at length as well:
Three things I’d like to address today. Trading fees on the fx market & it’s relation to market makers, the pair matrix and tick sizes.
The 0.50% (50bp) trading fee applied to FX transactions is a barrier to people actually using the FX market. Because this fee exists, very large FX transactions are incentivized to just buy lightweight items people are selling into the mm (UTS, drones, etc) and ship them out themselves to avoid the fee.
While this action will still have a place in the economy…
And here:
It’s not that clear.
Median volatility is slightly lower with the smaller tick size, and there is no
evidence of changes in the extent to which price changes are subsequently reversed
Now this is in real markets.
In my opinion, for us in PRUN, volatility will go down. Not up.
Why would people offering better prices sooner than they otherwise would have cause volatility to go up?
Another piece of information about tick sizes causing spreads to be tighter and causing them to collapse fu…
And here:
Well by definition, yes, smaller tick size = tighter spreads.
If you have a two markets, both are valued at $100. One has $1 ticks, one has $0.01 ticks.
As is quite common for low IV (implied volatility) stocks, spreads will collapse and people will be offering on both sides of the spread. As close as possible as things can be without matching.
In market one, you will have bids at $100 and asks at $101.
In the other market, you will have bids at $100.01 and asks at $100.02.
Technically, yes…