Decimals Narrow Spreads in Early Days
Traders Magazine, March 2001
The pilot launch last month of 14 Nas daq stocks trading in decimal prices cut spreads by half in the first three days, according to preliminary statistics compiled by the Nasdaq Stock Market.
Overall, both quoted spreads and effective spreads fell by about half, Nasdaq noted. Quoted spreads measure costs for retail investors using small market orders; effective spreads are calculated as twice the absolute difference between the actual trade price and the prevailing bid-ask mid-point.
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