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Medium · Market Microstructure · Quant Trader interview question · tick-size, spread, queue-depth, market-microstructure, liquidity
A stock currently trades with a minimum tick size of 0.01 dollars and an average quoted spread of 0.03 dollars. You observe that queue depths at the best bid and offer are approximately 100 shares each. The exchange decides to reduce the minimum tick size to 0.005 dollars. Assuming no other changes in market conditions, what is the expected effect on the quoted spread and queue depth?