SEC Staff to Host Decimalization Roundtable
The Securities and Exchange Commission today announced that its staff will host a roundtable early next year to discuss the impact of decimal-based stock trading on small and mid-sized companies, market professionals, investors, and U.S. securities markets.
The roundtable will be held on Feb. 5 at the SEC’s Washington, D.C., headquarters, and will be open to the public and webcast live on the SEC’s website. Information on the agenda and participants will be issued shortly.
U.S. stock markets adopted decimal pricing increments in place of fractions in 2001, in part to address concerns that the U.S. was at a competitive disadvantage to markets outside the U.S. using decimal pricing. Proponents of decimal pricing also pointed to evidence of artificially wide spreads — the difference between the price to buy and sell a stock — with fractional pricing, which might benefit market makers at the expense of investors. Since the advent of decimalization, however, various parties have raised concerns that its adoption may be detrimental to small and mid-sized companies.
The Jumpstart Our Business Startups Act, or JOBS Act, enacted in April, directed the Commission to conduct a study of the effects of decimalization on initial public offerings (IPOs) and on small and middle-capitalization companies. In its Report to Congress on Decimalization, the SEC staff recommended that the Commission solicit the views of investors, companies, market professionals, academics, and other interested parties on decimalization generally, its effects on IPOs and on trading and liquidity for small and mid-cap companies, and what, if any, changes should be considered. The roundtable will provide a forum to discuss these issues and explore specific recommendations on structuring pilot programs to gather additional data and analysis on these issues.