Sub-penny quoting is the practice of offering a decimal of a cent higher than a stock’s asking price or another buy order. It is also called sub-penny pricing or sub-penny trading. Subpenny trading followed, in part, from the switch from fraction-based stock prices to decimalization in 2001. When stocks began to be quoted in decimal increments, the smallest increment in which stock prices move was narrowed to a penny at Nasdaq and at the New York Stock Exchange. However, some systems continued to let their customers trade in increments smaller than a penny, in order to gain an edge.
- Nasdaq Pushes On Split-Penny Issue. The Wall Street Journal/Stanford Law School.