The Securities and Exchange Commission has told U.S. stock exchanges to create a pilot program that would allow some stocks to trade in five-cent increments, to see whether that trading structure would increase the liquidity of some stocks.

The SEC ended the practice of trading stocks in fractional dollar values (down to one-sixteenth of a dollar) in the 2000s, in favor of trading in one-cent increments. Critics of that move say it actually reduced the liquidity of certain types of stocks—particularly small-capitalization companies—because it squeezed out the profit for traders to the point where they no longer bothered.

SEC Chairman Mary Jo White issued the special order on Tuesday, directing the exchanges and the Financial Industry Regulator Authority to devise a new pilot “tick plan” within 60 days.

The pilot program should last one year, the SEC order said, and only be open to companies that have a market cap of $5 billion or less, average daily trading volume of 1 million shares or less, and a stock price above $2. The SEC wants to cap the number of participants at 300, in a control group kept at one-cent increments, a test group trading at five-cent increments, and a second test group that would sometimes trade at a mid-point between offered and current prices.

The new tick plan is partly driven by the JOBS Act, passed in 2012. Section 106 of the law directed the SEC to conduct a study on the effect of decimalization in stock prices, and with an eye on the question of whether one-cent increments dried up liquidity for smaller companies and curbed enthusiasm for initial public offerings. The report ultimately found that many countries allow a variety of tick sizes for smaller companies, along with academic research suggesting decimalization squeezed smaller companies' trading appeal.

Plenty of other voices on the market still support decimalized stock trading for all, the SEC order said, but “nevertheless, the Commission believes that legitimate questions have been raised as to whether the minimum tick size regime for the U.S. equity markets should be refined and enhanced.”

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