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September 26, 2000 [The Wall Street Journal Interactive Edition]

Stock Market's Shift to Decimal Pricing
Gains Steam as Second Test Phase Starts

By GASTON F. CERON
Dow Jones Newswires

NEW YORK -- The march toward trading stocks in dollars and cents gained momentum as the second phase of a decimals pilot program successfully got under way.

In the first phase, which began Aug. 28, only 13 stocks were "decimalized" at the New York Stock Exchange and American Stock Exchange, as their prices were displayed for the first time using decimal points, such as $10.13. Monday, scores of other stocks also ceased trading in fractions, such as 101/8, including such investor favorites on the NYSE as America Online Inc. and Compaq Computer Corp.

John Panchery, a vice president at the Securities Industry Association and manager of the trade group's decimals project, said Wall Street had an orderly transition to the second pilot phase. His report was echoed by the two major stock exchanges that are taking the lead in the program. "We're not experiencing any problems," said a spokesman for the Amex, a unit of the National Association of Securities Dealers. "Things have been smooth," a NYSE spokesman echoed.

At the Big Board, the second pilot phase switched 57 securities representing 52 issuing companies to decimals, and the Amex moved 46 securities representing 38 issuers. Options based on the newly decimalized stocks also joined the conversion, while the Amex also transferred three of its index-share products to decimals.

The next stop on Wall Street's road to decimalization will come Nov. 1, when a stock-exchange committee will review the progress made during the test phase. One issue sure to be discussed is the effect decimalization is having on the industry's computer systems. Decimalization allows stock prices to fluctuate in increments as small as a penny, increasing the volume of price quotations and trades.

Come Nov. 1, three alternatives are likely to be on the table, Mr. Panchery said. One would be to "do nothing and wait for Nasdaq" -- the NASD's Nasdaq Stock Market, which is expected to begin its rollout of decimal quotes in March. Another choice would be to decimalize the remaining stocks listed on the NYSE and Amex and their accompanying options. And a third path, which in Mr. Panchery's view is least likely, would be to switch the remaining listed stocks' options to decimals, but hold off on the stocks themselves.

Write to Gaston F. Ceron at gaston.ceron@dowjones.com



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