Decimalization Finds Its First Victims at Ameritrade

Computerworld - The first decimalization-related problem of the year has hit Ameritrade Holding Corp. customers trying to buy and sell bulletin board-traded stocks.

Standard & Poor's, a division of New York-based The McGraw-Hill Cos., on Feb. 5 included incorrect data in its ComStock data feed, which provides Ameritrade with the quotes for these stocks.

The glitch stemmed from a miscommunication with Nasdaq Stock Market Inc. in Washington, which is in the process of converting from using fractions to decimals in its stock quotes.

The problem was that Nasdaq began using new message types that weren't interpreted properly, resulting in garbled data, said David Brukman, vice president for technology at Harrison, N.Y.-based Standard & Poor's ComStock Inc.

"It was a fairly complex change, and a couple of message formats were subject to interpretation," he said. "We and a couple of other data vendors interpreted it differently from what Nasdaq intended."

Ameritrade discovered the problem on the morning of Feb. 5 and corrected it by 6 o'clock that evening, said Phil Nunes, a spokesman for the Omaha-based company.

"The people who went to the Web site to trade were asked to call an 800 number and conduct the trade with a broker," he said. However, the affected customers weren't required to pay the higher broker-assisted trading price.

Nunes said Ameritrade is still evaluating how many customers were affected and how much the glitch cost the company.

Ameritrade wasn't the only broker affected. According to Wayne Lee, a spokesman for Nasdaq, approximately 10% of the recipients of that data feed had problems interpreting the decimal-based messages. Recipients included London-based Reuters Group PLC and Roseland, N.J.-based Automatic Data Processing Inc.

Most of the other recipients fixed the problem the same day or on Feb. 6, Lee said.

He added that Nasdaq had kept its clients fully informed that this particular feed was switching over to decimals, with vendor alerts on its Web site, e-mails and telephone communications.

According to Larry Tabb, an analyst at Needham, Mass.-based TowerGroup, the ComStock glitch was the first problem reported with the decimalization process.