The Securities and Exchange Commission generally approved a proposal by the Financial Industry Regulatory Authority and the national securities exchanges to widen minimum quoting and trading increments for certain stocks with smaller capitalization. The objective is to assess whether such changes might enhance their market quality. The SEC made some changes from the original August 2014 proposal, including extending from one to two years the term of the pilot program and modifying the market capitalization thresholds for securities to be included. The pilot program will include stocks of companies with US $3 billion or less of market capitalization, average daily trading volume of one million shares or less and a volume weighted average daily trading price of at least US $2. The pilot program will begin by May 6, 2016, and include one control group of 1400 securities and three test groups of approximately 400 securities—each subject to slightly different conditions. One test group will have pilot securities quoted and traded in minimum five-cent increments, subject to certain conditions and exceptions. Recently, Chen Yao, an assistant professor at the University of Warwick, and Mao Ye, an assistant professor at the University of Illinois at Urbana-Champaign published a quantitative study entitled “Tick Size Constraints, High Frequency Trading, and Liquidity” that argued that large relative tick sizes in low-priced securities decreases price competition and increases the importance of speed for trade execution—thus helping high-frequency traders and not necessarily improving market quality (click here to access the study). According to these professors, “[our] results undermine the rationale for ... the policy proposal to increase the tick size to five cents.” The Office of Financial Research of the US Department of Treasury funded this study in part.