The French have done it for hundreds of years and the British embraced it decades ago. But when it comes to quoting stock prices, the U. On Monday, 13 stocks on the New York Stock Exchange and their associated options will start trading in dollars and cents. The second phase of the pilot program at the NYSE begins Sept. The rest of the securities industry will embrace decimal pricing next spring — the deadline set by the Securities and Exchange Commission.

The House of Representatives then began to look into changing to a more easily understandable pricing system. Earlier this year, the SEC ordered the NYSE and the Nasdaq to switch from fractions to decimal pricing by July 3.

The transformation was halted to allow for any technical difficulties associated with the change to the year In response, the SEC said it would leave the switch to the markets themselves. Now the timetable for decimalization has the NYSE and the Nasdaq implementing decimalization by April. The slower implementation also allows companies, regulators and consumers to get up to speed, he adds. Those in favor of decimalization, including the Congress, say a more understandable pricing system is long overdue and will make markets more user-friendly.

Most of those working in the markets, although not totally against the move to decimals, say it could present some short-term challenges.

One of these challenges is capacity, says Panchery. The ripple effect is an increase in trades, quotes, orders, cancellations and other message traffic, according to a SIA report on decimalization. Large amounts of message traffic could cause capacity problems, especially on high volume days.

Such a strain on capacity has been seen before. When the markets changed from quoting prices in eighths to sixteenths in June , causing a 14 percent increase in message activity, according to the SIA report.

Another difficulty for brokerages could be the cost of implementing new technology to handle the capacity, said Craig Pirrong, assistant professor of finance at Washington University in St. Many brokerages are worn out financially from the many technological changes imposed by securities regulators in recent years — a list that includes the Order Audit Trail System, where brokerages must report all electronic orders for Nasdaq securities, and Y2K technology contingency plans.

But most brokerages are prepared, says Panchery. Indeed, companies like Instinet, an electronic trading company that links up buyers and sellers, have worked to make sure they are able to deal with a capacity spike.

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New Approaches to Teaching Fractions - WSJ

Stock Exchanges Trade Fractions for Decimals By HREF. More Volume Those in favor of decimalization, including the Congress, say a more understandable pricing system is long overdue and will make markets more user-friendly. Techno Burnout Another difficulty for brokerages could be the cost of implementing new technology to handle the capacity, said Craig Pirrong, assistant professor of finance at Washington University in St.

Stock Exchanges Trade Fractions for Decimals.

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Why did the New York Stock Exchange report prices in fractions before it switched to decimal reporting?

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