News Release

NASD Calls on the SEC to Delay Decimalization

"Prudent thing to do"
"Important that we get this right"

Washington, D.C.—The National Association of Securities Dealers (NASD®) has proposed to the Securities and Exchange Commission (SEC) that it delay implementation of the decimalization of securities markets until 2001.

In a March 6 letter to SEC Chairman Arthur Levitt, NASD Chairman and CEO Frank G. Zarb noted, "As you know, the NASD is a strong proponent of the shift to decimals. We believe the change will make the equity markets even more accessible to investors and potentially reduce transaction costs. The Commission has shown strong leadership in moving the industry toward decimalization while providing a measured phase-in period to review markets. In light of the explosion of transaction volume and quotations levels in both the equity and options markets, however, we believe the shift to begin trading in decimals this year would impose unacceptable risks."

Zarb commented, "The prudent thing to do is to implement decimals when we know we are ready. We are not there yet. Nasdaq has been growing faster than other markets, so it is logical that we are more sensitive to capacity issues. We will not put investors and the market at risk by forging ahead too soon. It is important that we do this right."

The letter also encouraged the SEC to seek comments of other participants to gauge the overall industry readiness. While not the focus of the letter, the option markets also face enormous challenges in coping with message traffic growth on a move to decimalization.

As shown in the table below, since 1998 Nasdaq share volume per day has more than doubled and Nasdaq quote message traffic has more than tripled:

  1998 1999 Jan-Feb 18th 2000 Peak Level ’98 to ’00 % increase
Avg. Daily Share Volume (billions) .791 1.05 1.70 2.231 +115%
Avg. Daily Quote Msg. Traffic (millions) 1.025 2.093 3.870 4.9552 +278

1 Record share volume was 2,232,343,100 which occurred on March 1, 2000.
2 Record quote message traffic was 4,954,564 which occurred on March 2, 2000.

The National Association of Securities Dealers, Inc., is the largest securities-industry, self-regulatory organization in the United States. It is the parent organization of The Nasdaq Stock Market®, The American Stock Exchange®, and NASD Regulation, Inc. For more information about the NASD and its subsidiaries, please visit the following Web sites:;;;  or the Nasdaq NewsroomSM at