Two of the nation's stock markets will make their first break from a pricing system that traces its roots back to Spanish "pieces of eight" Monday, when the New York and American stock exchanges begin trading a few stocks in increments of a penny, instead of fractions of a dollar.
New York Stock Exchange
will convert pricing for seven stocks to decimals from fractions in a test that's a precursor to a scheduled switch of all U.S. stocks and options trading to decimals by early next year. Historically U.S. markets have listed stocks and options in fractions of a dollar based on eighths -- or increments of 1/8, 1/16 or smaller.
Federal regulators want the markets to convert to decimals, which most major foreign bourses use. Regulators and members of Congress also believe trading in decimals will benefit investors by reducing the spread between the price at which a stock is offered and its sale price.
The companies included in Monday's decimalization trial run at the NYSE are
Forest City Enterprises
The NYSE says it's ready for the switch. "There will be some additional testing this Saturday, but we don't anticipate any problems," says spokesman Ray Pellecchia. It's set to expand the list of stocks traded in penny increments to another 52 securities on Sept. 25.
The AMEX plans to begin listing six equities in penny increments Monday. They are
Global Light Telecommunications
Securities and Exchange Commission
has called for all U.S. markets to list stocks in decimals by April 9, 2001. The SEC had wanted decimal trading to begin by July 3, but the
Nasdaq Stock Market
demanded a delay, insisting its technology wasn't ready to handle the increase in electronic message traffic anticipated with decimalization.