What is an IKB tick? - briefly
The IKB tick represents the minimum price increment allowed for securities on the IKB market, defining the smallest measurable change in a security’s quoted value. It serves as the standard unit for price quoting and trade execution on that platform.
What is an IKB tick? - in detail
The IKB tick represents the smallest permissible price increment for securities traded on the IKB platform. It is a fixed unit that determines how much a quoted price can move up or down in a single step. The tick size varies according to the instrument’s price range, market liquidity, and regulatory requirements.
A tick functions as a quantifiable measure of price granularity. When an order is entered, the system rounds the price to the nearest allowable tick. This rounding prevents the posting of prices that fall between defined increments, ensuring uniformity across the order book.
Key characteristics of the IKB tick include:
- Instrument‑specific values – equities, bonds, and derivatives each have distinct tick sizes, often expressed as a fraction of the instrument’s nominal price.
- Minimum price movement – a price change smaller than the tick cannot be executed; the market must move at least one tick to register a new price.
- Impact on spread – tighter tick sizes generally narrow bid‑ask spreads, enhancing market efficiency, while larger ticks may widen spreads and affect transaction costs.
- Regulatory alignment – tick definitions comply with German and EU market‑making rules, which prescribe minimum increments to maintain orderly trading.
The calculation of a tick value follows a tiered structure. For example, an equity priced below €10 may have a tick of €0.001, whereas a price above €100 could use a €0.01 tick. This tiered approach balances precision for low‑priced assets with practicality for higher‑priced securities.
Traders must consider the tick when designing strategies:
- Order placement – specify prices that align with the permitted increments to avoid automatic re‑pricing by the system.
- Algorithmic execution – incorporate tick size into price‑prediction models to prevent false signals caused by sub‑tick fluctuations.
- Liquidity assessment – observe the frequency of tick‑level price changes; a high number of ticks per minute indicates active trading, while sparse ticks suggest limited participation.
Market participants can retrieve the current tick schedule from the IKB data feed or the exchange’s rulebook. Updates to tick sizes occur during periodic reviews, often triggered by changes in market depth, volatility, or regulatory amendments.
In summary, the IKB tick is a foundational parameter that defines the minimal price step for all tradable instruments on the platform. It ensures price consistency, influences spread dynamics, and shapes trading behavior across manual and automated market participants.