SEC Orders Trading in Decimals Beginning July 3

FRAMINGHAM (01/31/2000) - The U.S. Securities and Exchange Commission (SEC) has ordered U.S. securities markets to begin quoting securities prices in decimals rather than fractions on July 3.

In an order issued Friday, the SEC said the markets, including the New York Stock Exchange and the Nasdaq Stock Market have 45 days to submit a decimals-pricing implementation plan to the commission and must phase in decimal pricing by the end of the year.

During the six-month phase-in period -- from July 3 to the end of the year -- stocks will trade in minimum 5-cent increments, ultimately converting to 1-cent increments. No date has yet been set for trading in single cents.

Proponents of decimalization say they believe the shift will make U.S. markets even more competitive with international markets that already trade in decimals and make it easier for U.S. investors to understand stock prices.

"Decimal trading will benefit the investors by allowing greater competition and making it easier to compare prices," said SEC Chairman Arthur Levitt in a statement. "It will also bring about consistency with foreign markets, which now trade in decimals."

But one industry association leader said he's concerned that vendors won't be able to handle all the pricing changes that result from the conversion.

"The key is the ability... to communicate all of the price changes that pennies and nickels bring on," said Lee Korins, president of the New York-based Security Traders Association (STA).

Members of the STA worry that the markets' information infrastructure can't handle the additional volume, he said.

According to Korins, the inability to report price changes as they occur can cost financial services firms and investors millions of dollars.

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