NYSE Opposes House Bill to Convert Stock Prices From Fractions to Decimals

The New York Stock Exchange on Wednesday came out in opposition to a bill to convert U.S. stock exchanges from fractions to decimals in pricing, saying it could interfere with private competition.

“Investors and other market participants, not the government, should determine the wisdom of any move to decimal pricing,” NYSE President William R. Johnston told the House Commerce subcommittee on finance and hazardous materials.

The bill, introduced by House Commerce Committee Chairman Thomas Bliley (R-Va.) and a bipartisan group of congressmen last month, seeks to narrow trading spreads by requiring finer stock price increments.

Spreads--the difference between the “buy” and “sell” price of a stock--would be measured in pennies under decimal pricing rather than the prevailing increment of 1/8 of a dollar, or 12.5 cents.

Johnston also said that decimal pricing would deter dealers from trading in many stocks in the long run.

Wall Street brokerages and stock markets also would have to pay hundreds of millions of dollars to adjust their trading software to decimal pricing, he estimated.