Decimalization

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Decimalization

The quotation and trading of stock or bond prices in decimals, as opposed to fractions such as eighths.

Decimalization

1. The process of changing listings of security prices from fractions to decimals. Decimalization makes prices and the market easier for investors and laypeople to understand.

2. In the United Kingdom, the process of changing the calculation of the pound sterling to a decimal system. Prior to 1971, the UK had a very complex way of calculating subdivisions of the pound. Since then, the currency has been decimalized into 100 pence.

decimalization

The transition of security prices being quoted in decimals rather than fractions. Decimalization in U.S. markets started in fall 2000 with exchange-listed stocks and was completed in April 2001 with Nasdaq stocks. Studies during the transition indicated that moving to decimals benefited investors by reducing the bid-ask spreads.