Zero Minus Tick

AAA

DEFINITION of 'Zero Minus Tick'

A securities trade executed on an exchange at the same price as the preceding trade, but at a lower price than the last trade of a different price. For example, if a succession of trades occur in the following order - $10.25, $10.00, and $10.00 - the last trade would be considered a zero minus tick or zero downtick trade.

INVESTOPEDIA EXPLAINS 'Zero Minus Tick'

Until 2007, Securities And Exchange Commission (SEC) regulations prohibited against selling a stock short on a down tick or a zero minus tick. As a result potential short sales would have to pass a tick test to make sure that the stock was trading up or flat before the short sale could go through. The restriction was eliminated after the SEC concluded that U.S. markets functioned orderly enough that excessive short sales would not artificially drive down prices. The advent of decimalization also helped the rule get lifted because it reduced the average size of a tick move from fractions to pennies.

RELATED TERMS
  1. Short Selling

    The sale of a security that is not owned by the seller, or that ...
  2. Short Squeeze

    A situation in which a heavily shorted stock or commodity moves ...
  3. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
  4. Decimalization

    A system where security prices are quoted using a decimal format ...
  5. Tick Index

    The number of stocks trading on an uptick minus the number of ...
  6. Tick

    The minimum upward or downward movement in the price of a security. ...
RELATED FAQS
  1. Can you short sell stocks that are trading below $5? My broker says that I can't.

    Short selling can be very risky for both the investor and the broker. Brokers will often tell investors that only stocks ... Read Full Answer >>
  2. Why do you need a margin account to short sell stocks?

    The reason that margin accounts and only margin accounts can be used to short sell stocks has to do with Regulation T, a ... Read Full Answer >>
  3. Why is an increase in capital stock on a company's balance sheet a bad sign for stockholders?

    An increase in the total of capital stock showing on a company's balance sheet is bad for investors, because it represents ... Read Full Answer >>
  4. How effective is a poison pill defense against a hostile takeover?

    Poison pills can be effective against hostile takeovers depending on the strategy used by the target company and the persistence ... Read Full Answer >>
  5. How do companies report the value of their capital stock?

    A company's capital stock shows up in the shareholders' equity portion of the balance sheet. There are two general methods ... Read Full Answer >>
  6. What does the variance between the bid and ask price of a stock mean?

    The variance between a security's bid price and its ask price, also known as the bid-ask spread, represents the different ... Read Full Answer >>
Related Articles
  1. Active Trading Fundamentals

    When To Short A Stock

    Learn how to make money off failing shares.
  2. Options & Futures

    Using The VIX For Shorting Opportunities

    Find out how to use this tool to identify opportunities.
  3. Active Trading Fundamentals

    Short Selling Tutorial

    Want to profit on declining stocks? This trading strategy does just that.
  4. Investing Basics

    What is a Financial Market?

    “Financial market” is a broad term used to describe any forum where buyers and sellers meet to trade assets.
  5. Investing Basics

    Understanding Notional Value

    This term is commonly used in the options, futures and currency markets because a very small amount of invested money can control a large position.
  6. Investing Basics

    How to Calculate Risk Premium

    Think of a risk premium as a form of hazard pay for risky investments.
  7. Investing Basics

    What is Terminal Value?

    The terminal value of an asset is its anticipated value on a certain date in the future.
  8. Economics

    Explaining the Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment banking business.
  9. Investing

    Who's Banning Facebook Now?

    Facebook may have over one billion monthly users, but there are many countries, including China, where the social media giant is banned.
  10. Investing

    Why Facebook is Banned in China

    Tight controls imposed by China have resulted in the ban of several foreign social media sites, like Facebook, but how did this come about?

You May Also Like

Hot Definitions
  1. Standard Error

    The standard deviation of the sampling distribution of a statistic. Standard error is a statistical term that measures the ...
  2. Capital Stock

    The common and preferred stock a company is authorized to issue, according to their corporate charter. Capital stock represents ...
  3. Unearned Revenue

    When an individual or company receives money for a service or product that has yet to be fulfilled. Unearned revenue can ...
  4. Trailing Twelve Months - TTM

    The timeframe of the past 12 months used for reporting financial figures. A company's trailing 12 months is a representation ...
  5. Subordinated Debt

    A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known ...
  6. International Financial Reporting Standards - IFRS

    A set of international accounting standards stating how particular types of transactions and other events should be reported ...
Trading Center