The days of Fractions are Numbered


Monday, August 7th 2000, 12:00 am
By: News On 6


The more than century-old tradition of quoting stock prices in fractions is nearing an end. Hundreds of U.S. newspapers are converting their stock tables to more customer-friendly decimals.


Don't panic. That just means that stock prices are increasingly quoted in plain dollars and cents, just like a gallon of milk. A stock at the current price of $101/8 will be quoted as $10.13, and $103/16 becomes $10.19.


Starting Tuesday, The Dallas Morning News will publish the Nasdaq National Market, New York Stock Exchange and American Stock Exchange tables in decimals. Mutual fund prices were already listed in dollars and cents.


The Associated Press, which provides stock and other financial data to most U.S. newspapers, including The News, said more than 700 newspapers, or about 75 percent of its clients, have already converted to decimal pricing this year. In that regard, the papers are far ahead of the stock markets themselves, which have yet to convert their price-reporting systems to decimals.


Readers seem to like the change, said Don Clements, product manager for AP markets information.


"Readers are happy that they can read the stock prices now, and it's just more intuitive than fractions," Mr. Clements said. "The reaction from newspapers has been overwhelmingly positive."


Jim Henderson, deputy managing editor for USA Today, which made the conversion in April, said the few comments he's gotten have been favorable.


"It's certainly painless for readers," Mr. Henderson said.


And Steve Massey, associate editor/business for The Pittsburgh Post-Gazette, which made the conversion Thursday, said he's not gotten a single complaint from readers.


"That's not surprising because the stock tables are much easier for readers to understand," Mr. Massey said.


In the newly formatted stock tables in The News, decimals will be calculated to two places and rounded when necessary. A price of $151/8, or $15.125, becomes $15.13.


Mr. Clements said he expects almost all of the AP's client newspapers to make the change by Aug. 28. Most large newspapers are changing over to decimals even before the stock markets themselves do. The NYSE and the AMEX are considering an Aug. 28 start date for decimal pricing for at least a handful of stocks.


The minimum pricing increment will be one penny, but the U.S. Securities and Exchange Commission has given the markets the option of trading in increments of up to a nickel.


The conventional belief is that penny increments will result in smaller spreads – the difference between the price a buyer is willing to pay for a stock and the price a seller is willing to accept. The difference goes in the broker's pocket as profit.


Currently, spreads vary from 6 cents to 12.5 cents. Lawmakers have estimated that the smaller spreads will save small investors about $3 million a day in trading costs.


Small spreads are especially advantageous for active traders because the stock price has to rise only a small amount for them to sell for a profit.


On Sept. 25, the NYSE pilot program will expand to include about 50 listed stocks, in addition to some stocks from other markets.


Sometime in late November or early December, the NYSE will decide whether to extend decimal pricing to all of the 3,100 stocks listed on the Big Board.


The Nasdaq will begin quoting in decimals by April 9, which is the latest deadline set by the SEC.


The Nasdaq failed to meet a July 3 deadline and asked the SEC for more time.


Nasdaq spokesman Scott Peterson said the delay was caused by a dramatic increase in trading of Nasdaq stocks. Starting Tuesday, The Dallas Morning News will report prices in dollars and cents for stocks traded on the New York Stock Exchange, Nasdaq stock market and American Stock Exchange.


The markets themselves won't complete the transition to decimal pricing till next year. Until then, The News' stock tables will convert prices from fractions and round them to two decimal places.