Exchanges do very detailed studies of what tick sizes should be, as well as setting fifo/pro-rata ratios. Many products that have seemingly large tick sizes lik

Exchanges do very detailed studies of what tick sizes should be, as well as setting fifo/pro-rata ratios. Many products that have seemingly large tick sizes like eg treasuries or vix would not work otherwise. MMs will not be compensated enough for taking risk and will leave, liquidity will dry up, then liquidity-takers who are unable to execute desired size will also leave.