Citadel Securities has formally requested that the Securities and Exchange Commission launch a pilot program to test smaller price increments for certain stocks and ETFs. The firm argues that reducing tick sizes could improve market efficiency and liquidity before any broader structural changes are implemented. Citadel Securities believes this approach would allow regulators to gather real-world data on how narrower spreads affect trading costs and market quality.

The proposal comes amid ongoing debates about market structure and whether current tick sizes create unnecessary friction in trading. By suggesting a controlled pilot rather than immediate changes, Citadel aims to provide empirical evidence to guide future policy decisions. The firm's request specifically targets a subset of securities to minimize market disruption while still generating meaningful insights.

If approved, the pilot would represent a significant step in evaluating potential market structure reforms. The SEC has previously conducted tick-size experiments, most notably a 2014-2018 pilot that tested wider spreads. Citadel's new proposal essentially flips that approach, testing whether smaller increments could benefit investors and market participants. The outcome could influence how regulators approach future changes to trading mechanics.