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> From: Monte C. Smith <mcs@xxxxxxxxxxx>
> To: omega-list@xxxxxxxxxx
> Subject: Decimals, depth, transparancy
> Date: Friday, March 16, 2001 3:03 PM
>
> The NYSE is taking steps to undo the damage done to market transparancy
> when decimal trading began. The issue is that the fractions in previous
> use incorporated price ranges that were a lot wider than the price range
> of decimals (1 penny). So the number of shares available at "1/4" were
> almost always greater than the number of shares at, say, ".02" This
> means that while decimalization has narrowed spreads, transaction costs
> are sometimes higher, since multiple transactions may be required to
> fill an order at one penny, then the next penny, etc., whereas a single
> transaction may have been enough at 1/4.
> It also means that quotes at a given decimal price tend to obscure the
> true market transparancy since the best bid/offer at a given decimal may
> represent only a few shares, while the bulk of shares available may be
> several cents away, thus giving a distorted picture of depth.
> The initiatives proposed by the NYSE have fast-track approval from the
> SEC, and are already being tested by many quote vendors. 87% of the
> issues comprising the S&P 500 Index are NYSE listed stocks.
> More here: http://www.nyse.com/press/NT00022742.html
> Thanks to John Lothian for further disseminating this news.
>
> Regards,
> Monte
>
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