A few weeks ago, we covered the new Reg NMS round lot, and speculated that the change would help lower spreads for higher priced stocks.
More than 250 symbols have been trading with the new round lot for more than a month, since the new round lot came into effect on November 3, 2025. Today, we dive into the universe of symbols with a new round of lots and what impact it has had on trading.
Only 3% of listings have new round lots
Any stock or exchange-traded product (ETP) priced at more than $250 in September 2025 received a new round of lots in November.
However, this turned out to only affect about 250 symbols – probably less than you might think considering the work that went into this change. Overall, it accounts for only 3% of the listings, made up of 1% ETPs and 4% corporate equities.
Nevertheless, the impact of this change is more significant than it seems. Thanks to the type of stocks with high prices, it shows:
- 23% of the S&P 500 Constituent And 40% of stock in the Dow.
- 38% of all price Nasdaq-100 traded (Although only 17% of shares traded).
- 36% of all price S&P 500 traded.
Chart 1: 25%-40% constituents of major indices get fresh round lots
The big impact on these benchmark indices is because share prices of many large companies are still relatively high. Notably:
- For the 40-share round lot, 197 companies were affected, including META, TSLA, ULTA and ADBE.
- For the 10-share round lot, 14 companies were affected, including BKNG and MELI.
- For ETPs, 39 have a 40-share round lot, which includes QQQ and SOXX.
Because of that, stocks with smaller round lots actually represent a much larger proportion of the value traded. In fact, stocks with new round lots add 27% to average daily value turnover (ADVT).
This means, for traders, these changes are more impactful than they first appear.
Both spreads and depth are reduced for selected high priced stocks
All the work we (and others) have done on ticks and depth indicates that small round lots will reduce depth, but also tighten spreads.
Not surprisingly, this is exactly what we found:
- Shares in 10-share round lots saw a 50% decline in the average spread (from 61 basis points (bps) to 30bps).
- Stocks with 40-share round lot average spreads narrowed 34% (by 42bps to 25bps).
- ETP spreads (all affected ETPs receiving 40-share round lots) fell 8% (from 4.3bps to 3.6bps).
Chart 2: Spreads for affected stocks decreased significantly and almost immediately
Not surprisingly, with less depth required to qualify for NBBO resulting in tighter spreads, we also observed a reduction in depth.
Chart 3: Depth also reduced significantly for affected stocks
However remember that these individual round lots were specifically selected to maintain NBBO depth of at least $10,000 worth. This was done so that the new NBBO still represented an appropriate amount of liquidity for institutional investors to trade and for retail investors to be benchmarked.
The U-shape for dispersion almost disappeared
Despite the smaller spreads, Chart 2 shows that these higher priced stocks still have spreads that are several ticks wide. This means there are still “a lot of ticks” inside these new spreads. As a result, we expect the market spread based on share price to still remain in the familiar U-shape.
In fact, preliminary data (violet line) shows that although these stocks are not at their “optimal” spreads – the U-shape has certainly flattened for the higher priced stocks. This means that stocks above $250 (with smaller round lots) are now trading like stocks in the $150-$250 (and 100-share round lots) group.
Chart 4: New NBBO spreads still wider than odd lot spreads
We also see that these new spreads are well above the “odd lot” spreads in the market – this will also be added to the Rule 605 report soon.
Crossing the Nasdaq-100® Basket Is Now 1 Basis-Point Cheaper
If we consider how the individual spreads of each stock in the NASDAQ-100® add up to the cost of crossing the portfolio spread, we find that the basket spread has fallen from 5.5bps to 4.5bps – making it 1bps cheaper.
That’s because many of the largest stocks in the NASDAQ-100® have received new round lots. In the chart below, we rank stocks by index weight and show stocks with new round lots in pink and blue. The size of the circle reflects the relative liquidity of each stock. The curve of circles shows the incremental cost that each stock adds to the portfolio’s spread cost; The curve of the gray bar shows the incremental portfolio weight added by each stock.
Chart 5: Trading costs in the Nasdaq-100® basket dropped nearly 20%, with many stocks seeing small round lots
The new round lot worked as expected
Looking at the data, these new round lots worked as expected. The market quickly adopted him and his new economics – both depth and spread costs declined.
Although relatively few stocks have changed hands, the impact on trading, especially for institutional investors, is large – thanks to the concentration of large and liquid stocks with high share prices.
The new, tighter spreads protect retail and institutional investors from exceeding the exchange spreads in these stocks. For a basket like the NASDAQ-100®, this could reduce their trading costs by approximately 18%.
