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February 1, 2001

No Windy City Decimal Consensus

By Peter Chapman

Decimilization got mixed reviews at the Security Traders Association of Chicago annual winter bash. Buyside traders were critical, but sellside pros had some praise.

"Some of our trading decisions don't amount to much more than a stab in the dark," Sharon Lenzi, head trader at Chicago's $63 billion Liberty Fund Group, told the crowd at a panel discussion. "No one shows any real size in these stocks." She said her experiences trading under the New York Stock Exchange's five-month old pilot program have made her pessimistic about the outlook for better prices and lower trading costs. Michael Pratt, a block trader of America Online and Time Warner with Goldman Sachs, is frustrated as well, but only because market making has become more "cumbersome."

"It takes extra steps to find out what the real liquidity is," Pratt said. Pratt added though that decimal-trading has its benefits. His losses are smaller when trading out of positions and facilitating customers' short sales.