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Fraction-to-Decimal Bill Advances in House

May 22, 1997|From Associated Press

WASHINGTON — A bipartisan proposal to scrap the 200-year-old stock-price fractions and require dollars-and-cents pricing for shares got a boost Wednesday as a House panel nudged it toward a vote by the full chamber.

Despite opposition from several lawmakers, including the panel's senior Democrat and other members from New York, the House Commerce subcommittee on finance approved the measure by voice vote and sent it to the full Commerce Committee.

"Passing this bill will be an eagle for all of our markets and for their customers," panel chairman Rep. Michael Oxley (R-Ohio) said before the vote, employing a golf analogy. He said it would bring "better pricing for investors through competition," potentially saving them $1 billion to $2 billion a year in trading costs.

Proponents of decimal pricing insist it's time to abandon the traditional system of quoting prices in one-eighth increments, which, they say, fills brokers' pockets at the expense of consumers.

Supporters say adopting the new system would narrow the difference between a stock's best bid and asking prices, known as the "spread." Spreads typically vary from 12.5 cents to 50 cents.

But stock exchanges and the securities industry have said the change would be prohibitively expensive because of the new technology required.

Some opponents have suggested that the Securities and Exchange Commission should study the matter before taking action. Under the legislation, the agency must adopt a timetable for dollars-and-cents pricing within a year of enactment.

SEC Chairman Arthur Levitt Jr. told lawmakers in a letter Monday that a switch to decimal prices is "both desirable and inevitable," but he stopped short of endorsing the bill.

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