Vanguard supports the move and has been actively involved in the issue. There will be no effect of decimal pricing on Vanguard's systems because historically we have run on a decimal system. The change is scheduled to be phased in by July 3, but SEC Chairman Arthur Levitt said on March 30 that the target date could be postponed, possibly for months. The National Association of Securities Dealers, the parent of the Nasdaq Stock Market, has asked the SEC to extend the deadline. Decimalization will make the U.S. markets consistent with foreign markets, which already use decimal pricing.
Lower spreads can mean lower transaction costs for individual and institutional investors alike.
So if a stock trades at a two-tick spread, the trader's profit margin is 12.5 cents. While supporting decimalization, Vanguard hopes that the transition will be gradual to avoid disrupting the orderly trading of equity and options markets, Mr. Stetler said. A one-cent spread could dramatically increase trading volumes, he explained. Stocks that currently trade in 6.25-cent increments trade at 16 different prices per dollar. Inc. All rights reserved.