Updated from 1:40 p.m. EST
Securities and Exchange Commission
is likely to delay its deadline for U.S. stock markets to start quoting prices in decimals rather than traditional fractions, a top SEC executive said Wednesday.
The July 3 deadline for switching to decimals will probably be pushed back, said Robert Colby, deputy director of SEC's
unit. However, he did not indicate how much extra time regulators will give to stock markets.
"My guess is that the July 3 date will be pushed back," said Colby, speaking at a panel for Wall Street professionals hosted by the
Securities Industry Association
, a Wall Street trade group.
The news comes two weeks after the SEC extended related deadlines requiring the major markets to submit details of their plans to move to decimals, and their proposals for carrying out the plans. Those deadlines, which were each extended by a month, are now set for April 14 and April 28, respectively. Colby said those deadlines are likely to be extended again.
Colby's remarks are seen as a reversal of the SEC's steadfast standing on the decimal deadline. As recently as two weeks ago, the SEC said it would not move back the July 3 deadline.
The SEC's apparent willingness to delay the starting date for using decimals comes amid pressure by the
National Association of Securities Dealers
, which has said its Nasdaq stock market's computer systems are not ready to handle such a swift switch to decimals.
New York Stock Exchange
, the other major stock market, has said that it can meet the deadline, but it has been unclear whether the SEC would risk letting the NYSE make the switch before the Nasdaq.
That risk has been amplified by some industry advocates. SIA president Mark Lackritz asked the SEC to back off its deadlines Tuesday, cautioning that disparate quotations on the two exchanges could confuse investors and lead to erratic variations in quotes and prices.
The SEC's push toward switching from the archaic use of decimal quotations to more simple decimal language of dollars and cents was unveiled Jan. 28. Currently, stocks are mostly quoted in sixteenths, which equal 6 1/4 cents. Under the plan, a specified number of stocks were to begin trading in 5-cent increments by July 3, and in penny increments by the end of the year.
Arthur Levitt, the SEC's chairman, and some members of
have asserted that trading in decimals will eventually help to narrow trading spreads, the difference between the bid price and ask price for a stock, allowing for more favorable conditions for traders.
Separately, the SEC said Wednesday that one of its five commissioners, Norman Johnson, would leave the regulatory agency by the end of the summer and return to his home in Utah.
Johnson, 69, had been appointed by President Clinton and sworn in by Congress in February 1996. He was one of two Republican commissioners on the SEC, known best for his work on accounting standards and practices for small businesses.
Johnson had also served as an SEC staff attorney from 1965 to 1967.