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How Minimum Price Increments Shape Displayed Quote Precision

Article Quant Q&A · Author: Peteris
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Summary

The document explains why market quotes may appear with different numbers of decimal places by connecting display precision to minimum price variation, also called a minimum price increment. It says public U.S. equity quotes and U.S. stock indices are conventionally shown to the nearest penny, while hidden equity orders may use smaller increments. The number of displayed digits can therefore reflect the instrument and its quoting convention rather than a universal rule for all assets.

The examples include an oil quote that appears to have more precision than expected, even though the linked NYMEX crude contract specification gives a one-cent-per-barrel minimum fluctuation. The answer treats that display as anomalous. For EUR/USD spot, it suggests that four decimal places may follow a convention associated with the corresponding futures market, while acknowledging that Yahoo's data source is unclear. These examples illustrate the principle, but do not establish Yahoo's exact formatting logic or data pipeline.

Key ideas

  • Minimum price variation is one factor that governs quote precision.
  • Public U.S. equity and index quotes are conventionally displayed to the nearest penny.
  • Hidden equity orders can use sub-penny increments.
  • The oil quote example appears inconsistent with the cited futures tick size.
  • The suggested EUR/USD precision convention is tentative because the data source is unclear.

Tags

EquitiesFuturesForexMarket microstructure
Full text
# In Yahoo! Finance, what determines the number of decimals for a stock/index quote?


# In Yahoo! Finance, what determines the number of decimals for a stock/index quote?












In Yahoo! Finance, we see the following quotes among others:

```
Nasdaq  3,136.19     -13.27 -0.42%
Oil        89.879997  -1.83 -2.00%
EUR/USD     1.3031     0.00 +0.11%
```

What determines the number of decimals displayed?

## Answer by chrisaycock (score 2, accepted)

https://quant.stackexchange.com/a/4285

This is an example of minimum price variation (also known as the minimum price increment or the minimum price fluctuation).

All public quotes for US equities are displayed to the nearest penny. (Hidden quotes may be entered at sub-penny increments.) US stock indices follow this convention and thus quote to the nearest penny.

The oil listing is odd indeed. If I click through to the full oil page, I only see that the price is listed to the nearest penny. Indeed, I see that this price represents the NYMEX crude (CL) contract. From the CME Group's contract specification, the minimum fluctuation is one penny per barrel. So it's bizarre that Yahoo's front page is showing something else.

As for the Euro, that's a spot price. I can't see exactly where Yahoo is getting their data, but they do describe it as "bank rates". (Google gets theirs from Citi.) I suspect the convention is 0.0001 dollars increment per euro since that's what CME Group uses in the futures market.

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.