The EU believes that if tick sizes are too high, they will inflict unnecessary costs on investors, whereas if they are too low it may damage the smooth workings of the market. It is hard to strike this balance as the optimal tick size differs from one share to the other, depending on the market and the liquidity of the share.

Anders Balling, the assistant director general at the Danish FSA, explained: “The change from the old tick sizes on Nasdaq Copenhagen to the new common European tick sizes have, in general, had no or only minor impact on the transaction costs in Danish shares when considering trades below 500,000 krone. This applies to both the liquid large cap shares and the less liquid small and mid cap shares.”