Home > Finance > Financial News >Regulatory News US SEC chief calls for stock decimalization review Tue May 13, 2003 06:39 PM ET WASHINGTON, May 13 (Reuters) - U.S. Securities and Exchange Commission Chairman William Donaldson on Tuesday said "decimalization" -- the shift made in 2001 to trade U.S. stocks in decimals instead of fractions -- needs to be reexamined. "Generally speaking, I think the whole issue of decimalization needs to be looked at again," Donaldson said in an interview on business news television station CNBC. Two years ago, the New York Stock Exchange, Nasdaq and the American Stock Exchange decided to join the rest of the world in expressing stock prices to the penny, abandoning the quirky U.S. practice of saying, for instance, 7-5/16 per share instead of the clearer $7.31 per share. Decimalization has cut into Wall Street's profits and traders are complaining loudly, especially in the limited markets where it has been taken to the extreme of sub-penny pricing -- or reporting a price at, say, $7.3125. Sub-penny pricing has led to razor-thin bid-and-ask spreads and made limit orders harder to fill, according to critics. "Clearly, the spreads have narrowed, but the total cost of transactions, I suspect, has increased," Donaldson said. "And I suspect the liquidity that used to be in the market has been severely dampened by these very narrow spreads. I think that the whole issue really needs to be looked at."