Decimal pricing

Decimal Pricing

The listing of a security's price in decimals instead of fractions. For example, decimal pricing means that a security would be listed as, say, $25.25, instead of $25 1/4. Decimal pricing makes prices and the market more understandable for investors and laypeople.

Decimal pricing.

US stocks, derivatives linked to stocks, and some bonds trade in decimals, or dollars and cents. That means that the spread between the bid and ask prices can be as small as one cent.

The switch to decimal stock trading, which was completed in 2001, was the final stage of a conversion from trading in eighths, or increments of 12.5 cents.

Trading in eighths originated in the 16th century, when North American settlers cut European coins into eight pieces to use as currency. In an intermediary phase during the 1990s, trading was handled in sixteenths, or increments of 6.25 cents.

Mentioned in ?
References in periodicals archive ?
Over the past 50 years, with the development of a privately managed pension system, the deregulation of trading commissions and a move to decimal pricing, assets flowed away from bank deposits to investment accounts controlled by a growing asset-management industry.
The odds will be displayed in decimals as decimal pricing gives the Coral traders greater fl exibility to offer you a better price.
Although many believe that decimal pricing has benefited small individual (retail) investors, concerns have been raised that the smaller tick sizes have made trading more challenging and costly for large institutional investors, including mutual funds and pension plans.
Securities firms alone will invest nearly $1 billion to successfully convert their systems to decimal pricing, according to a study by the Tower Group, an information-technology consulting firm in Needham, Massachusetts.
The order required (1) the markets to submit a decimals pricing implementation plan by March 13, 2000 and (2) the options and equities markets to phase in decimal pricing by year-end.
The commission also set a March 13 deadline for the markets to submit a decimal pricing implementation plan.
Nazareth worked on numerous groundbreaking initiatives, including execution quality disclosure rules, implementation of equities decimal pricing, short sale reforms, implementation of a voluntary regime for consolidated supervision of broker-dealer holding companies and modernization of the national market system rules.
Since then, various positive and negative effects have been attributed to the transition to decimal pricing.
Nasdaq will implement two decimal pilot programs prior to converting all equity securities fully to decimal pricing.
markets have been meeting on the move to decimal pricing since February and say they don't expect the industry's conversion to be completed until September 2000.
40, which allows users to easily respond to the securities industry's move from fractional to decimal pricing (final changeover scheduled for completion by April 2001).
Proponents of decimal pricing insist it's time to abandon the traditional system of quoting prices in one-eighth increments, which, they say, fills brokers' pockets at the expense of consumers.