All U.S. stocks could be priced in decimals in less than a year, according to an industry proposal.
Under an SIA steering committee plan, a select group of stocks will begin trading next July with minimum quote increments of 5 cents. By October, all stocks will trade in decimals with increments set by market forces (see "Decimal Conversion Schedule in 2000," below).
The SEC is reviewing the conversion proposal and is expected to approve it. An SEC spokesperson did not know when the commission would consider the plan.
Decimal pricing has long been supported by investor advocates, SEC staff and Congress, but opposed by the industry.
"The industry is committed to conversion, and it will happen," says an SIA spokesperson. "We're doing this to provide a better understanding of the market and for the country to be more competitive."
All major foreign markets already trade in decimals.
The SIA has updated information on decimalization on its home page at www.sia.com.--Tom Nelson
April 8 and May 13: Industry testing will occur.
July: First phase of decimal pricing begins, involving 30 to 40 securities over five weeks. Minimum trading increment will be 5 cents.
August: Second phase begins, covering all stocks for eight weeks. The minimum increment is 5 cents.
October: Final phase begins, covering all securities with minimum increments set by market forces.
Throughout the process, an evaluation team will recommend when to begin the next phase.--Tom Nelson