Decimalization Creates an Unexpected Casualty: Stock Quote Value

The switch to trading stocks in units of a penny rather than fractions of one-eighth of a dollar was touted by supporters as a way to bring U.S. markets up to speed with the rest of the world, and as a potential savings for small investors. But market observers say decimal trading in a pilot group of securities has shown there's also a casualty: the value of the stock quote itself.

While the gap between the price at which a stock is offered and the price bid by investors appears to shrink with the change, which can benefit investors, stocks often may not be available for purchase at the price shown.

"The quotation is not all that meaningful," says Lee Korins, president of the Security Traders Association. "What's the real market? ... It just shows that there's not a lot of liquidity in these penny increments." ...