Securities Pricing:

Progress and Challenges in Converting to Decimals

T-GGD-00-96: Published: Mar 1, 2000. Publicly Released: Mar 1, 2000.

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Thomas J. McCool
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Office of Public Affairs
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Pursuant to a congressional request, GAO discussed its recent reports on the securities industry's progress toward implementing decimal trading, focusing on the: (1) progress made to date toward converting to decimals; and (2) challenges that remain.

GAO noted that: (1) although securities market participants have made progress in preparing for decimal trading, some key challenges remain for the industry to successfully implement decimal trade; (2) because the capacity study commissioned by the Securities Industry Association projected that decimal trading is likely to significantly increase trade and quotation message traffic, a primary challenge will be to ensure that the industry's communication and processing systems have adequate capacity; (3) the options markets and the Nasdaq Stock Market, Inc. face the greatest difficulty in preparing for the increased message traffic from decimal trading; (4) other steps that must be completed before decimal trading can be implemented include developing market standards and implementation procedures, ensuring that market participants' systems are ready to process decimal prices, and revising all rules necessary to govern trading; and (5) however, these steps are not yet complete and, in some cases, progress has been hampered by other impediments, including an ongoing antitrust investigation of other options markets.

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