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."
Could be big trouble for the ecn's .....especially if Best bid and ask has to in increments of 1/16th
I posted on the other thread, but pennies are much better for me. Five years ago, the MMs had a much easier time raping traders in my opinion. Decimals and ECN's are the best thing that ever happened to the market (unless you are a MM or just scalp the spread).
You know it's weird, but i think this can bring the NAZ MM's back into the game....how many bids and asks did they miss out on because an ECN is 1 penny better ( but not including their penny or 1/2 penny markup in )???? if you have to increase by fractions it's a bigger gamble and it's a matter of who has the bigger balls....i mean, jumping over another MM or ecn to be the Best Bid or ask is often time a matter of offering 1000 shares at ..01 better...that's a 100. buck gamble...but jumping over for some action at 1/16th or 1/8th ....now you gotta have some balls and some conviction, which this market has lacked for 2 1/2 years
While they're at it, they should get rid of Supermontage...or include everyone in it. The second a Nasdaq stock has news, it's mass chaos.
really can't understand why some of you want nickels, or dimes or whatever. it's the SPECIALISTS who are pushing this. that alone should tell you that it would not be to your benefit.
Seems just like the nonsense with taking the ETFs off of Island because the poor piggies at Amex were losing market share. This whole thing could be handled electronically, but I guess just like always big business needs to be sheltered from small capitalists.