Diploma and bachelor theses

Execution venues are striving for innovations in their market design to enhance liquidity in particular. Literature found decimalization in US markets and the reduction of tick sizes leading to an increase in liquidity. An issue that has not been analyzed as widely as decimalization is the impact of relative tick size, i.e. tick size related to a security’s price level, on liquidity. If there was a relationship in effect, adapting a security’s tick size to its price level – instead of a general tick size for all or a segment of securities as common nowadays – would present an instrument for exchanges to promote liquidity. The objective of this bachelor thesis is to comb through academic literature on the topics of decimalization and tick size reductions. As a result a bachelor student is supposed to provide a comprehensive and wellstructured overview on the theoretical foundation, methodologies and results of studies centering on the foresaid fields of research.