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Island ECN began trading some Nasdaq stocks in decimals
on Monday, ahead of Nasdaq itself and the New York
Stock Exchange. Island, the electronic communications
network operated by Datek Online Holdings, is the
second largest electronic trading network after Reuters'
subsidiary Instinet.
US stock prices have traditionally been quoted and traded in fractions of a dollar, with the minimum increment usually being one sixteenth of a dollar, or 6.25 cents. Decimal quotes allow for more precision, since moves of one cent are possible, and it is supposed that this will reduce spreads and probably increase trading volumes.
The long-overdue change was to have happened at the New York Stock Exchange on 3rd July, but it has been delayed until September when a trial 50 stocks will be switched to decimals - the problem has been lack of capacity in brokerage back office systems exacerbated by historically high levels of trading. The Nasdaq itself will not switch until 1st March 2001.
Island's competitor, Instinet, has said that it would prefer that the whole industry switched at one time, but now may have to fall in line behind Island.
See Discussion Forum Topic: The OECD v Offshore - add your comments!
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