Round Lots Cut Spreads in High-Priced Stocks

New Round Lots Reduce Trading Spreads

Since the implementation of updated Regulation NMS round lot rules on November 3, 2025, more than 250 stock symbols and exchange-traded products have transitioned to smaller round lot sizes. This adjustment, aimed at high-priced securities, has now been in effect for over a month, allowing analysts to thoroughly examine its effects on market dynamics and trading efficiency.

Just 3% of Listings Impacted by Changes

In September 2025, any stock or exchange-traded product priced above $250 automatically qualified for a revised round lot size starting in November. Surprisingly, this regulatory update influenced only about 250 symbols, representing roughly 3% of all listings. This includes 1% of ETPs and 4% of corporate equities.

Even though the number of affected securities is relatively small, the overall market implications are substantial. High-priced stocks tend to dominate major benchmarks, accounting for:

• 23% of S&P 500 constituents and 40% of Dow Jones Industrial Average components.
• 38% of the total value traded in the Nasdaq-100, despite comprising just 17% of the shares volume.
• 36% of the total value traded within the S&P 500 index.

Chart 1: Major indexes saw 25%-40% of constituents get new round lots

The pronounced effect on key indexes stems from many leading companies maintaining elevated share prices. Key details include:

• 197 companies shifted to 40-share round lots, such as META, TSLA, ULTA, and ADBE.
• 14 companies adopted 10-share round lots, including BKNG and MELI.
• 39 ETPs received 40-share round lots, notably QQQ and SOXX.

Consequently, these adjusted stocks contribute to 27% of average daily value traded across the market, underscoring their outsized role and making the changes particularly relevant for active traders.

Spreads Tighten and Depth Adjusts for High-Priced Securities

Prior research on tick sizes and liquidity depth predicted that smaller round lots would lead to reduced depth alongside narrower spreads. Recent observations confirm this precisely:

• 10-share round lot stocks experienced a 50% average spread reduction, dropping from 61 basis points to 30 basis points.
• 40-share round lot stocks saw spreads compress by 34%, from 42 basis points to 25 basis points.
• ETP spreads, uniformly adjusted to 40-share lots, declined by 8%, from 4.3 basis points to 3.6 basis points.

Chart 2: Spreads decreased significantly, and almost immediately, for affected stocks

As anticipated, the diminished depth requirement for NBBO quotes correlated with tighter spreads, resulting in observable reductions in available depth.

Chart 3: Depth also decreased significantly for affected stocks

Importantly, the new round lot parameters were calibrated to ensure NBBO depth equivalents at least $10,000 in value. This design preserves meaningful liquidity for institutional trades and serves as a reliable benchmark for retail participants.

U-Shaped Spread Pattern Flattens Considerably

Chart 2 illustrates that while spreads have narrowed, high-priced stocks retain multi-tick widths, indicating persistent tick density within quotes. Early post-change data reveals a notable flattening of the traditional U-shaped spread curve for elevated price levels.

Stocks priced over $250 now exhibit spread behavior more akin to those in the $150-$250 range, which continue using 100-share round lots, suggesting improved alignment across price tiers.

Chart 4: New NBBO spreads still wider than odd lot spreads

These revised spreads remain above prevailing odd lot levels, which are expected to feature prominently in forthcoming Rule 605 disclosures.

Nasdaq-100 Basket Trading Costs Drop by 1 Basis Point

Evaluating the cumulative spread costs across Nasdaq-100 constituents reveals a portfolio spread reduction from 5.5 basis points to 4.5 basis points—a 1 basis point improvement. This stems from multiple high-weight stocks adopting smaller round lots.

In the accompanying visualization, stocks are ordered by index weight, with new round lot recipients highlighted. Circle sizes reflect relative liquidity, while the curve illustrates each stock’s contribution to overall portfolio spread costs.

Chart 5: Trading costs in Nasdaq-100 basket declined almost 20% with many stocks seeing smaller round lots

Regulatory Changes Deliver Anticipated Benefits

Data analysis confirms the new round lots performed exactly as projected. Markets swiftly adjusted to the altered economics, with both depth and spread costs declining promptly.

Although affecting a minority of stocks, the reforms carry substantial weight for institutional trading due to the prominence of large-cap, liquid names. Narrower spreads now better safeguard both retail and institutional investors executing off-exchange trades, potentially lowering Nasdaq-100 basket costs by approximately 18%.