Securities and Exchange Commission
said Monday that it would miss its self-imposed July 3 deadline to have stock prices quoted in decimals instead of fractions, and it would probably not be prepared to change the system before Labor Day.
In separate letters sent to a number of congressmen, Arthur Levitt, chairman of the SEC, said the
stock market's "lack of readiness" would prevent the implementation of decimalization, a move widely seen as benefiting investors.
"At this point in time, we simply do not have the necessary assurance to determine if ordering the listed market to move ahead by Labor Day would create widespread complications," Levitt said in the letters.
"In a time of unprecedented volume and volatility, I believe it would be ill-advised to force a major structural change in our markets without the confidence that order will be maintained," he said.
Levitt said early last month that the SEC was still committed to the July 3 deadline, despite a request by the
National Association of Securities Dealers
, the parent organization of the Nasdaq stock market, to delay the move to pricing stocks in decimals until next year.
But on Monday, Levitt said that if the SEC went ahead with decimalization without the Nasdaq's participation, then stocks would simultaneously trade in both decimals and fractions, a move that could rattle the stock market.
"Communications with a broad array of market participants -- including market data vendors, clearing firms, clearing houses, equity and options markets, and broker-dealers -- raised concerns that the simultaneous trading of decimals and fractions could pose risks to systemic stability," Levitt said.
In March, the NASD argued that shifting to decimalization this year would expose investors to unacceptable risk because the NASD is already coping with increased pressure on its systems capacity.