"This is as tough a tape I've seen in 10 years and decimals aren't helping," said Sam Ginzburg, senior managing director of equity trading at

Gruntal

. "It's making it even tougher to trade because there's no depth to the market."

Translation: Liquidity is evaporating because it is now spread among 100 price points per dollar.

Adaptation of pennies has made it more difficult and cumbersome to move large blocks of stock because of the increased number of transactions per trade, traders gripe. The result is increased paperwork as traders and clerks sort through execution reports to confirm both that trades were accomplished and to figure the "average price," because institutional clients don't want to hear they got 10,000 shares at $10.01 and 15,000 at $10.02 and 12,000 at $10.03, etc. etc.

That, in turn, is generating frustration among many market participants.

Decimalization is "a major pain in the ass," said the head trader at one West Coast shop who requested anonymity. "And I don't see it getting any better. Wait until we get the over-the-counter" stocks trading in decimals, which is scheduled for full implementation on April 9.

Additionally, concerns expressed here a

year ago appear to have come to fruition: Specialists are "front-running" orders, topping or undercutting limit orders for just a penny, sources say.

Among others,

Barron's

wrote on this issue last weekend. The weekly also repeated the standard line about decimalization being beneficial for retail investors, but the article offered little evidence and market watchers remain dubious.

Retail investors "need to be careful how

they introduce and manage limit orders" because if they're not priced properly "they could sit there and not get executed," said Joseph Anastasio, chief client partner at

The Capital Markets Co.

, a developer of e-business, risk, and operational solutions for financial institutions.

Anastasio gave a "real-world" example of how this might prove vexing. For his personal account, he recently offered to sell shares of the

SPDR Technology Sector

fund

(XLK) - Get Report

at $34.80 when the bid/ask spread was $34.70 to $34.83.

Thirty minutes later, the order hadn't been completed and the spread had moved to $34.68 to $34.81. So Anastasio lowered the offer to $34.75. After still getting no takers, he lowered the price again and eventually sold the shares at $34.71 (interestingly, which is where the fund closed today after falling 2.6%).

"Do I feel I got the best possible price for sale?," he mused. "I don't know. But I'm almost positive under the old methodology the bid/offer would have been 34 11/6-13/16 and I would have gotten the trade done at 34 3/4, or 4 cents higher."

Anastasio's experience reflects the concerns of Lee Korins, president of the

Security Traders Association

.

Decimalization "was geared to help the individual investor, who would see tighter spreads and buy 100 shares in penny or two spread," he said. "That's probably true. But if the individual saves some money going in, he/she loses some going out. It's a zero-sum gain. If you win on the bid side, you lose on offer. You don't win on both."

Both Korins and Anastasio said it's too early to really determine whether decimalization is a success or failure, noting trading volumes and volatility have been relatively low since the NYSE fully adopted decimals on

Jan. 29.

But the STA president repeated two criticisms of the decimalization movement. First, Korins believes the NYSE should have first traded in nickel increments "to give ourselves a chance to learn something about decimals." Second, once the Nasdaq starts rolling out decimals on March 12 for 15 stocks, they'll only have about five weeks before full roll-out on over 6,000 issues. "That's a horrendous task in a short period of time," he said.

Media representatives at both the NYSE and Nasdaq did not return phone calls seeking comment.