Options penny pilot (2007-2008)
In 2007, the SEC approved a pilot program reducing the minimum price increment for options in 13 classes from $0.05 to $0.01. The pilot later expanded to more classes, narrowing bid-ask spreads and changing how market makers quoted prices.
Spreads narrowed and trading volumes rose in the affected classes.
Penny quoting became standard across US options markets, reshaping market maker economics.
Shows how SEC-driven changes to options quote standards ripple through market making, much like BZX's new tiered differentials.
