BUSINESSWEEK ONLINE : FEBRUARY 21, 2000 ISSUE
BUSINESSWEEK INVESTOR Decimal Pricing Pros and Cons PROS NARROWER SPREADS Trading costs will fall as the gap between dealers' bid and ask prices for most stocks falls from 6.25 cents to 5 cents or even a penny. MORE QUOTES Active traders will change buy and sell prices more frequently as the cost of outbidding other traders shrinks. CONS CONFUSING REPORTS Because dealers will spread the shares they have to sell across more prices in hopes of reaping extra pennies, even 1,000- or 2,000-share orders may be filled at three or four different prices. FEWER LIMIT ORDERS Individual investors who specify a fixed price to buy or sell will be less likely to get orders filled. LESS PAYMENT FOR ORDER FLOW With smaller spreads, dealers will have less money to pay brokers to route orders to them. Dealers will compete instead on execution speed and price improvement. DATA: TRADING IN PENNIES BY LAWRENCE HARRIS _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _					RELATED ITEMS Commentary: Should You Be Scared of Decimal Stock Pricing? TABLE: Decimal Pricing Pros and Cons INTERACT E-Mail to Business Week Online

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