Saturday, June 24, 2000

Decimal switch creates division, to a point

By Eileen Glanton
The Associated Press

        CHICAGO — Wall Street is almost ready to begin doing decimals, with the New York Stock Exchange and the Nasdaq Stock Market preparing pilot programs in decimal trading for September.

        Investors and federal regulators are eager for the change. But traders at an industry conference this past week said they're concerned that the switch from frac tions will overwhelm a market already pressed by longer trading hours and soaring volume.

        “All of us are investing a tremendous amount of capital — financial and human — to prepare for this change,” said Peter Madoff, senior managing director at Bernard L. Madoff Investment Securities.

        The move to decimalization will end a 200-year-old tradition of quoting stock prices in fractions. As a precursor to the change, exchanges in 1997 began quoting stocks in sixteenths of a dollar. Until then, stocks had been traded in eighths.

        As a result, the price of a share of AT&T can now be expressed as 34 15/16. Newspapers and many Web sites have already switched to decimals, listing that price as $34.938.

        It isn't yet clear whether stocks will be traded in 5-cent or 1-cent increments. The New York Stock Exchange will begin testing the decimal system this September with a basket of 50 stocks traded in pennies. The Nasdaq Stock Market will follow a similar timetable, and officials have said the market's all-electronic trading system will be prepared for either nickel or penny price increments.


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