Penny quotes by 1999 suggested SEC helping markets map journey away from fractions; Securities industry


WASHINGTON -- The Securities and Exchange Commission is suggesting that U.S. stock markets should start quoting stocks in pennies by January 1999, a year earlier than the target date set by the New York Stock Exchange, stock market executives said yesterday.

SEC officials met with representatives of the nine national and regional stock markets Tuesday to start working out their conversion to decimal increments from fractions.

Richard Lindsey, SEC director of market regulation, floated January 1999 as a target date for all the exchanges to start quoting stocks in dollars and cents, said American Stock Exchange President Thomas Ryan and Pacific Exchange spokesman Dale Carlson.

Many of the exchanges said their computers would be ready by then, but said decisions to go forward would depend on the readiness of the brokerages' systems, said Ryan and Carlson, who attended the closed meeting.

The exchanges suggested waiting for studies of brokerage readiness, which are to be completed later this summer by the NYSE and the Nasdaq stock market, Ryan and Carlson said.

"I don't think the SEC is off the wall here," Ryan said. "They set an ambitious schedule because it's the best probability of having it done more quickly. But they're being reasonable in that, if the industry can prove it's impractical, they'll listen."

Neither Lindsey nor his deputy, Robert Colby, responded to requests for comment.

The NYSE, the nation's largest stock market, this month became the first U.S. exchange to announce plans to convert to decimal quotes, which are used by the rest of the world's stock markets. It set a tentative start date of January 2000.

The other U.S. markets are expected to follow suit.

"Our own system will be ready within a year, and we'll start as soon as possible after that, which depends on the readiness of the industry's computers," said NYSE spokesman Ray Pellecchia.

Quotes in dollars and cents -- for example $10.50 or $10.75 instead of 10 1/2 or 10 3/4 -- are intended to give investors access to better stock prices by narrowing the trading spread, the difference between the buying and selling price of a stock. The three national stock markets -- NYSE, Nasdaq and the American -- began quoting in sixteenths of a dollar, or 6.25 cents, in the last two months. They had been quoting in eighths, or 12.5 cents.

The brokerages' computers probably will be ready to start quoting in decimals by the first quarter of 1999, said Bernard L. Madoff, head of the Securities Industry Association's trading committee.

"My guess is that the first quarter of 1999 is a date that everyone's going to try to hold to," said Madoff, who heads the New York investment banking firm that bears his name.

"The SEC wants it to happen, and the industry will have to either meet that date or show cause why it can't."

Pub Date: 6/28/97

Copyright © 2020, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad