[10996]
May 20, 1999
TO: EQUITY MARKETS ADVISORY COMMITTEE No. 16-99
RE: NASD ISSUES SPECIAL NOTICE TO MEMBERS REGARDING
DECIMALIZATION
______________________________________________________________________________
The National Association of Securities Dealers ("NASD") has issued a Special Notice to
Members (attached) discussing the NASD’s preparations to move from fractional pricing to decimal
pricing. The NASD intends to move to decimal pricing by June 30, 2000, in order to meet the time
frame established by the Securities and Exchange Commission.
The Special Notice to Members outlines the securities industry’s efforts to prepare for trading in
decimals, including background information, benefits of decimal pricing, the industry time frame, and
steps firms will need to take to prepare for the conversion. Among the benefits of decimalization noted
in the Special Notice are: making pricing easier to understand for investors, which in turn could bring
more investors to the marketplace; creating an increased savings potential for investors if decimal pricing
leads to smaller price increments and narrower spreads; and making U.S. markets more compatible with
non-U.S. markets that already trade in decimals. In addition, the Special Notice discusses some of the
issues surrounding decimalization including Minimum Price Variation (MPV), quoting and trading
volume, new emerging trading strategies, and capacity issues.
Ari Burstein
Assistant Counsel
Attachment