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To: Wayners who wrote (8520)	11/14/2000 1:30:47 PM
From: TFF	Read Replies (2) \| Respond to of 12617

Nasdaq to Use 1-Cent Increments in Opening Decimals Next Year Nasdaq to Use 1-Cent Increments in Opening Decimals Next Year Washington, Nov. 14 (Bloomberg) -- The Nasdaq Stock Market said it plans to use 1-cent increments when it introduces decimal pricing for all stocks next April, though some brokerage executives voiced doubt the market will be ready to start then. Nasdaq officials said previously they might open decimals trading in 5-cent increments to avoid strains on computer capacity at the second-largest U.S. stock market. Nasdaq President Rick Ketchum said the market's trading systems have been performing well in decimals testing. ``We're going to start with pennies for competitive reasons,'' he said in an interview. ``Our tests have been very successful, and we're ahead of schedule.'' Nasdaq, which lists technology giants such as Microsoft Corp. and Intel Corp., plans to continue decimals testing with brokerages through next March, Ketchum said. Dollars-and-cents pricing is expected to lead to narrower trading spreads -- the difference between buying and selling prices -- for investors. Penny increments, in turn, are likely to result in smaller spreads than would nickels, while generating higher volume. Nasdaq is preparing to open a four-week trial with a limited number of stocks next March 12. All 5,500 of its stocks are to be trading in decimals by April 9. ``The phase-in period is too short, and Nasdaq may well end up with major systems problems,'' said Howard J. Schwartz, chairman of Lynch, Jones & Ryan in New York, an institutional brokerage owned by Reuters Group Plc's Instinet Corp. Delay Seen Schwartz, a Securities Industry Association board member, said he expects Nasdaq to have to delay its April start date by several months. Nasdaq's main rival, the New York Stock Exchange, has been using 1-cent increments in a pilot program that began in August. The NYSE, the world's largest stock market, plans to expand dollars-and-cents pricing to all its 3,100 stocks starting Jan. 29 -- two months before Nasdaq's scheduled start date. Nasdaq senior vice president Dan Franks said the market won't need more than a four-week trial of dollars-and-cents pricing because most firms will have gained decimals experience from trading NYSE stocks. A Charles Schwab Corp. executive said that once decimal pricing of Nasdaq stocks begins, the market should carefully monitor its impact on firms. ``Dealers could pull out their capital if economic returns aren't acceptable, and spreads go down to zero,'' Schwab vice chairman Lon Gorman said. Narrower spreads, which mean better prices for investors, also result in lower per-trade profits for brokers. Most stocks now trade in fractions, typically sixteenths, or 6.25 cents. Securities and Exchange Commission Chairman Arthur Levitt, pushed by Congress, set an April 9 deadline for U.S. markets to begin decimals trading on all stocks. Levitt had postponed an earlier deadline when Nasdaq said its computers lacked the capacity to handle increased volume. Congressional auditors last month questioned whether the SEC is adequately monitoring Nasdaq's decimal plans after failing to detect the market's computer problems earlier this year. The General Accounting Office recommended that the SEC closely oversee Nasdaq's preparations. Levitt is pushing U.S. options markets, which are preparing to trade in 5-cent increments, to be ready to trade in pennies within a year.