Stock exchanges that remove constraints on their minimum lot size or Minimum Trading Unit (MTU) increase retail trader participation and reduce transaction costs, according to new research from the University of Bath's School of Management.
Whilst most European stock exchanges now have a MTU of one share, a number of important stock exchanges, including the NYSE, the NASDAQ and the Tokyo Stock Exchange, still set higher MTUs, which are decided at the discretion of the exchanges or, in some instances, by the issuing companies.