(Round) Lots of Change: What the upcoming Reg NMS changes mean for trading
First published in Traders Magazine, 27 October, 2025
By Dr Elliot Banks, Chief Product Officer, BMLL
As the U.S. equity markets brace for some of the largest regulatory resets in two decades, the SEC’s upcoming changes to the Regulation National Market System (“Reg NMS”) are poised to create a rewrite of how stocks are priced, traded and disclosed. The reforms, which take effect in November 2025 (with further changes in 2026), aim to improve market quality and lower transaction costs, through changes in tick size rules, lot sizes and how information, such as odd-lot quotes, are provided to the market.
These new rules have the potential to alter order queue dynamics, execution priority, routing decisions and price discovery. Understanding the impact of these changes, and what it means for trading, is critical for market participants in order to manage risk and to continue to trade effectively. In this article, we analyze some of the key Reg NMS changes, and what these might mean for market participants.
Areas of change
The key areas where changes will occur are:
Exchange access fees, such as lowering caps on access fees
Tick sizes, making certain stocks have a half penny tick size
Lot sizes, with different round lot sizes depending on price
Dissemination of odd lot information in the SIP (this will come into effect next year)
These are being introduced in a phased rollout, with the changes coming in November 2025, before further changes in May 2026. In addition, recent technology changes on NYSE (where individual trades are no longer aggregated before being sent to the SIP), and upcoming changes to off-book Trade Reporting to support fractional shares, mean that US equities market data is undergoing some of the most dramatic changes in years.
Tick size rules
Unlike other equity markets, the US equity market has a single, fixed tick size of 1 cent (excluding sub-dollar stocks). Under the new 2025 Reg NMS rule changes, stocks with an average tick size of less than $0.015 will change their tick size to half a cent. This is determined every 6 months.
For participants looking to backtest strategies, understanding the tick size is an important factor to consider. As we’ve written about previously, market structure features such as average size at touch can change considerably when tick sizes change.
Looking at data from July - September 2025 (which will be used to set tick sizes from November onwards), we find that approximately 1700 tickers will change tick size. While this is only 20% of Reg NMS securities, it corresponds to around 40% of USD traded, as shown in figure 1.
Understanding the impact of these tick size changes, and how their effect on execution algorithms and transaction cost analysis, will be essential for market participants.
Round lot updates
In addition to changing tick sizes, from November 3rd, the size of round lots will change from the standard 100 (or 1 for a very small number of stocks), based on the average closing price of the security:
| Average Closing Price | Round Lot Size (number of shares) | Example security |
| $250.00 or less | 100 shares | AAPL |
| $250.01 to $1,000.00 | 40 shares | TSLA |
| $1,000.01 to $10,000.00 | 10 shares | NFLX |
| > $10,000.00 | 1 share | BRK A |
Looking at the last evaluation period (July-September 2025), around 200 securities will be affected by this change, with the majority of stocks moving into the 40 shares bucket. This includes some high value retail stocks (such as TSLA, SPY and QQQ).
Importantly, by looking at the level 3 feeds, we can understand what spreads for these stocks will look like once the lot size changes come into effect. We find that, for securities where the lot size changes to 40 shares, there is an average spread improvement of 25%. However, there is still a significant difference between this new spread and the best odd-lot spread (which the SIP will disseminate from April 2026). In this case, we find the average difference between the current NBBO spread and odd lot spread is 47%.
It is important to note that these changes will not occur in isolation. By changing the round lot size, this will impact the price that protected quotes are displayed at, and could change the liquidity profile of the securities. For all market participants, understanding how changing lot sizes will impact top of book liquidity is critical, whether to accurately backtest or measure available liquidity.
Reporting changes
In addition to the SEC rule changes, other recent changes have come into effect. One particular change to note is how trades are reported from NYSE to the SIP. Previously, multiple trades that occurred at a single price and timestamp were bundled into a single report (and therefore not necessarily reported as an odd-lot trade). However, this was changed on August 22, 2025. We can see the effect before and after, as shown in figure 2 below. Previously, the depth feeds (red line, showed a different number of odd-lot traded volume between level 3 feeds and the SIP. However, since the change from the end of August, these two numbers are aligned.
To understand US equity behaviour, it's necessary to understand how trades are broken up and executed. The additional information provided by the depth feeds allows market participants to better understand the make up and types of trades that have occurred.
Leveraging Level 3 Data to get ahead of the changes
The changes to Reg NMS, beginning this November, represent a wide range of structural and technical changes to the US equity markets. By leveraging Level 3 data, market participants can better understand how tick sizes, odd lots and market data will be impacted, whether generating alpha, effectively trading or managing risk. This enables a smooth and easy transition to the new world of dynamic round lots and varying tick sizes.
