Saturday, January 29, 2000

Stock exchanges to quote shares in dollars, cents

Fractions gone by year's end

The Associated Press

        WASHINGTON — Federal regulators Friday ordered the nation's stock exchanges to begin quoting at least some share prices in dollars and cents by July 3, requiring them to fully abandon the 200-year-old use of fractions by year's end.

        The New York Stock Exchange, the Nasdaq Stock Market and other U.S. securities exchanges will be required to submit a decimal pricing plan within 45 days and to have decimal prices fully phased in by year's end, the Securities and Exchange Commission said.

        The exchanges have been putting together plans for phasing in decimal prices this year, now that the securities industry has cleared the Year 2000 technological hurdle.

        The SEC usually refrains from intervening in the markets. Spokesmen for the Securities Industry Association didn't return a telephone call seeking comment.

        “Decimal trading will benefit investors by allowing greater competition and making it easier to compare prices,” SEC Chairman Arthur Levitt said. “It will also bring about consistency with foreign markets, which now trade in decimals. We look forward to working with the industry to ensure that the transition to decimals goes smoothly.”

        As an interim step, the NYSE, the all-electronic Nasdaq and some regional exchanges have been quoting stocks in minimum increments of one-sixteenth of a dollar, instead of the customary one-eighth. In decimals, a sixteenth is 6.25 cents and an eighth is 12.5 cents.

        Supporters say adopting the decimal system would narrow the difference between a stock's best bid and asking prices, known as the spread. Spreads typically vary from 121/2 cents to 50 cents, an amount that adds up to a sizable profit for brokers, who take in a percentage based on the size of the spread.

        Some stocks will begin trading in nickel increments, though many could be trading in penny increments by the end of the year.


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