Nasdaq to begin phasing in decimal trading on Monday
The Nasdaq stock market tests the waters for trading in dollars and cents by switching 15 securities over to the new decimal system on Monday, March 12, Nasdaq said in a statement. On March 26, the 15 securities will be joined by those of 177 other companies—including Amazon.com, Apple Computer and Sun Microsystems.
Nasdaq's entire list of nearly 4,700 companies is set to begin trading in decimals by April 9. Until now, Nasdaq's shares have been traded in fractions—listed, for example, at $5-1/4 instead of $5.25. Nasdaq's main rival, the New York Stock Exchange, moved to full decimalization on January 29. The Securities and Exchange Commission, which oversees the US stock market, set the April 9 deadline for abolishing the antiquated system. Analysts say the shift from the unwieldy eighths and sixteenths of a dollar to plain dollars and cents should especially benefit private investors by making pricing easier and cutting trading costs.
Stocks are traded at a point between the "bid" and the "ask" value, and the decimals will make it easier to find a midpoint. Under the current fractions system, the price per share generally rises or falls by at least 1/16, or $0.0625. The system of trading in fractions harks back to 17th-century America, when one of the coins circulated, the "piece of eight," was regularly broken into eight pieces with a hammer and chisel.
Using this stable currency as a basis for their operations, early stockbrokers used fractions when they began trading shares. —(AFP)
© Agence France Presse 2000
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