[ by Howard Haykin ]

The SEC staff will host a roundtable on February 5, 2013, to discuss the impact of decimal-based stock trading on small and mid-sized companies, market professionals, investors, and U.S. securities markets.  The event will be held at SEC headquarters in Washington, D.C., and will be open to the public.  It also will be webcast live on SEC.gov.  Keep a lookout for information on the agenda and participants - which will be issued shortly.

Background Information.   In 2001, U.S. stock markets discontinued using fractions and adopted decimal pricing increments.  This was done, in part, to address concerns that the U.S. was at a competitive disadvantage to those foreign markets that had already made the switch.  Proponents of decimal pricing also pointed out that fractional pricing created artificially wide spreads, which might benefit market makers at the expense of investors.   On the flip side, various parties have expressed concerns that decimalization may be detrimental to small and mid-sized companies.

The Jumpstart Our Business Startups Act, or JOBS Act, enacted in April, mandated that the SEC study how decimalization affects IPOs and small and middle-capitalization companies.  The SEC Staff's Report to Congress on Decimalization staff concluded with a recommendation that the SEC solicit the views of investors, companies, market professionals, academics, and other interested parties on the following:

• decimalization generally;
• effects of decimalization on IPOs;
• effects of decimalization on trading and liquidity for small and mid-cap companies;
• what, if any, changes should be considered.

These issues will be addressed at February's roundtable, and participants will explore specific recommendations on structuring pilot programs to gather additional data and analysis on these issues.     [ SEC PR 12-250, 12/3/12 ].