MARKET SAVVY : Savvy Confidential: A Briefing for Investors : Securities Group Proposes Timetable for Switch to Decimals

The securities industry wants to convert stock price fractions to decimals over three months beginning in July, a trade group said Wednesday.

That timetable clarifies when exchanges and securities firms will begin quoting stocks and options in decimal increments instead of fractions, ending a two-century tradition. The Securities Industry Assn. said this “phase-in” will “protect the public and avoid major systems problems.”

But the task is daunting. Securities firms are grappling with potential year 2000 computer problems, extended trading hours and surging volumes. Decimalization “is an enormous headache,” said Scott Abbey, chief information officer at PaineWebber.

The SIA proposes that 30 to 40 stocks initially be converted over five weeks, beginning July 3. The rest would be switched from Aug. 7 to Sept. 29.

Most of the stocks initially would trade in minimum increments of 5 cents, instead of the current typical one-eighth increment (12.5 cents). Beginning Oct. 2, 2000, securities would trade in whatever increments the market bears. The switch would benefit investors by further narrowing stocks’ bid-asked price spread.

The SIA said it asked the Securities and Exchange Commission to issue rules to permit the phase-in.

The chairman of a congressional finance panel said Wednesday the New York Stock Exchange and Nasdaq should delay their planned public offerings until after the decimal conversion. Rep. Michael G. Oxley (R-Ohio) of the House Commerce subcommittee on finance said he asked SEC Chairman Arthur Levitt to make sure the markets first change the way stocks are priced.