Nasdaq Begins Trading Stocks in Decimals

By Maria Trombly

April 16, 2001 12:00 PM ET

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Computerworld - The Nasdaq stock exchange caught up to the rest of the securities industry - and the rest of the world - last week when it finally dropped fractions and switched to decimal stock pricing.
The transition went through without a hitch, said Scott Peterson, a spokesman for the Washington-based Nasdaq Stock Market Inc.
As expected, the spreads (the differences between the buy and sell prices) shrank, with those for the most active stocks declining the most. A typical spread fell by approximately 50%, Peterson said.
However, more time is needed before the exchange can accurately judge the change's effect on volatility and trading volumes, he noted.
The biggest fear - that options exchanges would suffer from higher trading volumes - also didn't come to pass.
"Decimalization went extremely well for us," said Dan Friel, CIO at the International Stock Exchange, a New York-based options exchange.
"Our systems were originally designed to handle everything in decimals," he added. "In fact, what added complexity was having to support decimals and fractions simultaneously."

Read more about financial in Computerworld's Financial Knowledge Center.

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