For Spain, whose realm once stretched from Latin America to the Philippines, the glory might have faded but its imperial influence not only survives but also flourishes every day on the floor of the New York Stock Exchange.
Traders at the Big Board, and at the other major U.S. exchanges and on Nasdaq - buy and sell nearly all stocks in increments of one-eighth.
The origin of the fractional system derived from the Spanish doubloon, which was divided into pieces of eight and tendered as currency in the early days of the United States and the NYSE, which was founded in 1792, according to Ray Pelecchia, director-media relations. But the influence of Spain might be on the wane.
The American Stock Exchange announced plans to quote all of its listed issues in increments of one-sixteenth, according to Gary L. Gastineau, vice president-new products planning, except for WEBS and Spiders and stocks selling under $10 a share, which the Amex already quotes in increments of one-sixteenth or lower. The Amex could begin one-sixteenth trading by the end of the month as soon as the Securities and Exchange Commission approves.
Steven M.H. Wallman, an SEC commissioner, has been speaking for a year or more advocating trading in cents, asserting the move would save investors billions. The proposal has been spurred by the investigation of Nasdaq spreads and the SEC Market 2000 study of 1994.
"The driving force is the larger spread," said Theodore R. Aronson, partner, Aronson + Partners, Philadelphia. "It explains why traders are attracted to Instinet," trading in one-sixty-fourths increments.
The current system prices stocks less exactly, he said. If stocks are priced just 1 cent a share over their value every day, the amount of overcharging in aggregate is huge. At 600 million shares a day, that amounts to more than $6 million a day, or roughly $1.5 billion a year.
The Toronto Stock Exchange - which last year changed from eighths to pricing in increments of 5 cents for stock priced at more than $4.99 a share - released a report recently saying "decimals have led to narrower trading spreads, which translate into a reduction in transaction costs."
At the Association for Investment Management and Research, Charlottesville, Va., Michael S. Caccese, senior vice president and general counsel, said, "In the scheme of things, there are other issues that should take priority.
"Is it better to put the effort on decimalization, or is it better to focus on other areas that may be less costly to implement and have a more immediate impact?" Two such issues are the standardization of international accounting rules and increasing disclosure of derivatives.
At Ibbotson Associates Inc., Chicago, Derek Sasveld, senior consultant, said decimals lead to more accurate pricing of stocks. He added: "There is no reason with a more fluid market it can't be done."
But Andrew A. Davis, president of Rock Island Securities Inc., Chicago, specialist on the Chicago Stock Exchange, said the government shouldn't tell business how to price its products. With the growth of other off-exchange trading, like Instinet, the market is moving to change already.
