Decimal Trading

A system in which the price of a security is quoted using a decimal format rather than fractions. For example, a decimal trading quote would be $56.25; using fractions, the same quote would appear as $56¼. The U.S. Securities and Exchange Commission (SEC) ordered all stock markets within the U.S. to convert to decimals by April 9, 2001. Prior to 2001, markets in the United States utilized fractions in price quotes. Since decimalization, all quotes appear in the decimal trading format.

Decimalization has led to tighter spreads since smaller price movements can be accounted for. For example, prior to decimalization, one-sixteenth (1/16) of $1 was the minimum price movement represented in a price quote (this is equal to $0.0625).

With decimalization, the minimum price movement is 1 cent for stocks over $1, providing a greater number of price levels and allowing for tighter spreads between the bid and the ask levels for trading instruments.


Investment dictionary. . 2012.

Look at other dictionaries:

  • decimal trading — The quotation and trading of stock or bond prices in decimals, as opposed to the quotation of prices in fractions. Bloomberg Financial Dictionary …   Financial and business terms

  • Non-decimal currency — A non decimal currency is a currency which has sub units that are a non decimal fraction of the main unit, i.e. the number of sub units in a main unit is not a power of 10. Contents 1 Contemporary non decimal currencies 2 Historic non decimal… …   Wikipedia

  • Non-decimal currencies — A non decimal currency is one which has sub units that are a non decimal fraction of the main unit.Today, only two countries in the world use non decimal currencies. These are Mauritania (1 ouguiya = 5 khoums) and Madagascar (1 ariary = 5… …   Wikipedia

  • Decimalization — A system where security prices are quoted using a decimal format rather than fractions. For example, this is a decimal trading quote: $34.25. Using fractions, the same quote would appear as $34 1/4. The U.S. Securities and Exchange Commission… …   Investment dictionary

  • India — /in dee euh/, n. 1. Hindi, Bharat. a republic in S Asia: a union comprising 25 states and 7 union territories; formerly a British colony; gained independence Aug. 15, 1947; became a republic within the Commonwealth of Nations Jan. 26, 1950.… …   Universalium

  • Exchange rate — Foreign exchange Exchange rates Currency band Exchange rate Exchange rate regime Exchange rate flexibility Dollarization Fixed exchange rate Floating exchange rate Linked exchange rate Managed float regime Markets Foreign exchange market Futures… …   Wikipedia

  • Economic Affairs — ▪ 2006 Introduction In 2005 rising U.S. deficits, tight monetary policies, and higher oil prices triggered by hurricane damage in the Gulf of Mexico were moderating influences on the world economy and on U.S. stock markets, but some other… …   Universalium

  • Legal tender — This article is about the payment medium. For the song, see Legal Tender (song). Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation.[1] Paper currency is a common form …   Wikipedia

  • pre-Columbian civilizations — Introduction       the aboriginal American Indian (Mesoamerican Indian) cultures that evolved in Meso America (part of Mexico and Central America) and the Andean region (western South America) prior to Spanish exploration and conquest in the 16th …   Universalium

  • Fixed-odds betting — is a form of wagering against odds offered by a bookmaker, an individual, or on a bet exchange. Contents 1 Calculating fixed odds 2 Types of odds offered 2.1 Fractional odds 2 …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.