Nasdaq Denies Its Business Interests Have Delayed Decimal Pricing

WASHINGTON -- A senior National Association of Securities Dealers executive Thursday defended the Nasdaq Stock Market's delay in quoting prices in decimals, denying that officials are preoccupied with developing international business alliances.

"We've been about as aggressive as one could be," NASD Executive Vice President Gregor S. Bailar said at a briefing.

In January, the Securities and Exchange Commission ordered the nation's stock markets to begin quoting in decimals by July 3. But last month, after NASD said it couldn't meet the deadline, the SEC reluctantly put its timetable on hold.

That prompted widespread grumbling that Nasdaq was content to pursue its own interests in global alliances while giving short shrift to the SEC's directive.

Decimal trading will allow stocks to trade in finer price increments and is expected to benefit investors by improving the process by which market prices are set.

Nasdaq's international ventures -- building markets in Europe, Japan and Hong Kong -- have been separately staffed, Bailar said, and have not impeded $100 million worth of decimalization work.

"We are absolutely committed to decimalization," he said. "We have been a leader in this."

By January, Nasdaq had developed a decimal system capable of handling trading and price quotations expected with a peak daily volume of about 2 billion shares, Bailar said. But as Nasdaq volume began to increase sharply in late 1999, concern grew that the system couldn't handle the load.

In February, NASD threw its hands up on the SEC deadline. As it happened, daily volume spiked to as high as 2.9 billion shares early last month, and 2 billion-share days have not been uncommon.

Nasdaq is now on notice from the SEC to be ready for decimals no later than March 31, 2001. Bailar said the market will be ready no later than February to quote prices in increments as small as a penny. Currently, the smallest price difference is generally one-sixteenth of a dollar -- 6.25 cents.

But the surge in volume means Nasdaq initially will tackle decimalization with its current trading system, then move in late 2001 to a next-generation model.