Timetable Set for Decimal Pricing Roll-Out

After months of debate and delay, regulators and stock market officials set a timetable to introduce dollars-and-cents prices for the first group of U.S. stocks starting Sept. 5.

The change from the historic practice of quoting U.S. stock prices in fractions of a dollar will begin this fall with a pilot program to phase in decimal prices on 50 New York Stock Exchange stocks, NYSE Chairman Richard Grasso said Tuesday.

The Nasdaq Stock Market, which had sought a delay in an earlier proposal to convert to decimals starting in July, plans to have a pilot program for Nasdaq stocks beginning March 12, 2001. The markets aim to use dollars-and-cents quotes for other NYSE and Nasdaq stocks by April 9, 2001, said Rep. Michael G. Oxley (R-Ohio), chairman of the House Commerce subcommittee on finance and a proponent of decimal prices.

Securities and Exchange Commission Chairman Arthur Levitt indicated no preference when asked whether the federal agency wants the NYSE and Nasdaq to initially use 1-cent or 5-cent increments.

Grasso said the NYSE intends to let stock quotes move up or down by as little as a penny when it starts using decimal prices. Nasdaq has said it prefers to trade in 5-cent increments for at least several months.

National Assn. of Securities Dealers Chairman Frank Zarb said NASD’s Nasdaq market is “prepared” to use decimal prices on Nasdaq securities by the end of March, on either a pilot or full basis and using either 5-cent or 1-cent price increments.

Zarb said a Nasdaq network that’s used for trading exchange- listed stocks also will be prepared to use dollars-and-cents quotes Sept. 4, when the NYSE’s pilot program is set to begin.

“The NASD remains a strong proponent of decimalization and is prepared to implement decimal pricing,” Zarb said.

Levitt and members of Congress have been pushing the securities markets to convert to decimal prices because they can offer a narrower trading spread, which is the difference between the buying and selling price of a stock. U.S. stocks currently are quoted in fractions, typically no smaller than sixteenths of a dollar, or 6.25 cents, though many financial publications already have converted to decimals.