The lower the better? Revisiting minimum tick size

Roland Mestel, Erik Theissen and Corinna Uhlenkamp

Applied Economics Letters, 2025, vol. 32, issue 17, 2460-2465

Abstract: We analyse the impact on liquidity of a reduction of the minimum tick size to sub-cent levels at the Vienna Stock Exchange. We find no effect, even after controlling for the extent to which stocks were constrained by the pre-change tick size. Our results imply that regulator-imposed lower bounds on the tick size are not necessarily harmful, and they fail to confirm the existence of a u-shaped relation between tick size and illiquidity as predicted by theoretical models.

Date: 2025
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DOI: 10.1080/13504851.2024.2333996

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