Ask at 603-11/16
The WSJ is reporting that the SEC is considering bringing back fractional pricing (may req subscription). The title for this post is what the current ask shown for Apple on Yahoo would look like if fractional pricing returned. Years ago, stocks were priced in dollars and fractions with 1/16 as the smallest quote increment.
According to the article,
Those championing the fraction's return say it would spur securities firms to buy and sell more shares of some companies by making it more profitable for them to do so. Opponents say fractions would increase trading costs for investors with little or no benefit to companies.
I think both statements are correct. Since the 'more profitable' part for securities firms would come out of stock investor's pockets and I, along with many here at the Fool, am a stock investor, put me in the 'opponents' camp on this one.
More quotes and comments:
If you move away from penny pricing, "investment banks will be able to make enough money trading…to write research and re-create the spark in the engine," said Jeffrey Solomon, chief executive of Cowen Group Inc.
Um, yeah, more trading and investment bank research, that's what this [lack of] recovery needs! Even if more investment bank research were needed, why should it be funded through bigger bid-ask spreads that make every stock trade pay part of the tab whether the buyer or seller have any interest in, use for or even access to the research they're paying for?
If your goal is to lure investors back into the market, raising their transaction costs doesn't seem like a particularly good way to do it," said Barbara Roper, director of investor protection at the Consumer Federation of America
Based on this quote alone, Ms. Roper should be on the short list for next chair of the SEC.
You'd think the SEC would have more important things on its plate than debating decimals vs. fractions. And if fractions, why 1/2, 1/4, 1/8, 1/16? How about 1/1000 or 1/1024, maybe 1/625? In this case, it boils down to bigger bid-ask spreads.
Off to peruse the SEC site and see if I can find any more on this apparent stupidity.
Fool on! Russ