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GAO: Nasdaq Needs More Decimal Oversight

October 24, 2000|Bloomberg News

The Securities and Exchange Commission should tighten its oversight of the Nasdaq market's preparations to convert to decimal share price increments next April, a congressional study said.

Nasdaq's planning methods have failed to give adequate attention to trading volatility in determining computer capacity, said the General Accounting Office, Congress' research arm.

The SEC said it would try to make sure that Nasdaq improves its computer-capacity planning, and would consider whether to step up its on-site examinations of the second largest U.S. stock market.

The SEC questioned, though, whether new on-site inspections recommended by GAO "would be an effective use of government resources," the report said.

The SEC delayed the introduction of decimals for nine months to accommodate Nasdaq's concerns that its computers lacked the capacity to handle expected increases in volume under decimal pricing. Nasdaq originally said its systems would be ready by July 2000.

Some stocks on the New York Stock Exchange have begun a trial program trading in decimals. All stocks are due to begin trading in decimals by April 9, 2001.

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