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Study: Decimals Cut Into Dealers' Profits

Traders Magazine, September 2000

William Hoffman

Decimalization is cutting into dealers' profit margins, according to a study by two finance professors.

The study concludes that quoted bid-ask spreads have declined "dramatically" in all 13 stocks taking part in the pilot decimalization program. On the American Stock Exchange, a decline of about 47 percent was noted for the six stocks in the program, while spreads shrunk by about 15 percent for the seven New York Stock Exchange Stocks taking part.

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