Monday March 12, 12:47 pm Eastern Time Nasdaq says AM glitch unrelated to start of decimals (UPDATE: all times in EST)

NEW YORK, March 12 (Reuters) - The Nasdaq stock market on Monday said its long-awaited decimal debut, listing 15 stocks in dollars and cents rather than the traditional fractions, went off as planned, and that a morning breakdown in part of Nasdaq's trading network was unrelated to the changeover.

According to a Nasdaq spokesman, SelectNet was down for about 15 minutes ending 10:30 a.m., the Small-Order Execution Systems was down for about 30 minutes ending 10:45 a.m. and CAEC/ITS was for nearly 40 minuted ending 10:50 a.m.

SelectNet is the link between traders in different Wall Street firms for routing orders, negotiating terms, and executing trades. The SOES allows automatic execution of trades of up to 1,000 shares. CEAS/ITS is Nasdaq's Computer Assisted Execution System/Intermarket Trading System. It allows the trading of New York Stock Exchange-listed shares by Nasdaq market makers.

``The Nasdaq Rockville Center, Maryland data center experienced a problem. It was unrelated to decimalization. This required a redirection of certain Nasdaq network functions to a backup Nasdaq data facility. Nasdaq is investigating the cause,'' the spokesman said.

The decimal move by the No. 2 U.S. equity market, which government regulators pushed for because they think it will give investors better share prices, brings Nasdaq online with stock markets around the globe.

The U.S. Securities and Exchange Commission initially ordered U.S. stock markets to make the switch to decimals by July 3, 2000, but backed down after Nasdaq said it would not be able to handle the expected surge in quote traffic volume, the trading data that filter through the computer systems of the U.S. markets every time a quote changes.

The New York Stock Exchange, Nasdaq's main rival, and the smaller American Stock Exchange started their decimal conversion program in August, and shifted all stocks to pennies in January.

Nasdaq has said it plans to stick to its decimalization schedule, which will list all stocks in pennies on the SEC deadline of April 9.

Early studies show that spreads on decimal stocks are indeed narrowing but some traders have complained that the increased pricing points with decimals have caused wild fluctuations in the market. This often means that traders must break larger orders up to complete trades, a time consuming and labor intensive process.

Reports have been coming from the floor of the NYSE of traders stepping in front of existing stock orders by merely upping their bid by a penny per share. Under fractions, traders had to improve their bids by a sixteenth, the equivalent of a little more than 6 cents, to step ahead.

The Big Board recently formed committees to develop possible solutions to problems that have arisen from pennies. The committees are expected to form a plan that can be presented at the NYSE's next board meeting in April. List of decimals stocks in Nasdaq's pilot http://biz.yahoo.com/rf/010312/n12227740_2.html

-- Tess (webwoman@iamit.com), March 12, 2001

Answers

Here's another more recent bit of news on the glitch...

Monday March 12 2:34 PM ET Nasdaq Converts to Decimals

NEW YORK (AP) - The Nasdaq Stock Market experienced technical difficulties with two of its automated systems on Monday, but said the problems weren't related to its testing of decimal pricing.

The Nasdaq, a computerized market, had no problem converting prices of 15 stocks to decimals from fractions in the first round of decimalization which began Monday, said spokesman Scott Peterson.

``Everything is proceeding according to plan,'' and Nasdaq is still on schedule to finish pricing all 5,000 stocks in decimals by April 9, the government-mandated deadline.

Unrelated to decimal prices, Nasdaq's data center in Rockville, Md. experienced problems with distributing data shortly after 10 a.m., Peterson said.

The Nasdaq is investigating what caused SelectNet, an order-matching system, to be down from 10:13 a.m. to 10:30 a.m., and that SOES, the market's small-order execution system, stop working between 10:12 a.m. and 10:45 a.m., Peterson said. The problems required Nasdaq to redirect some network functions to its backup data facility in Trumbull, Conn.

Meanwhile, ``the market continued to operate,'' Peterson said. ``Our ACT trade reporting system continued to register trades. People were able to continue to make trades in their proprietary system and on the phone.''

Peterson said decimalization didn't trigger the technical glitches, because the stock quoting and trading is done through its facilities in Trumbull, Conn., not Rockville, Md.

The government mandated in 1997 that U.S. stock markets price their issues in decimals, saying investors would better understand a price of $10.63 than $105/8. Decimals also allow stocks to be traded in penny increments, no longer limiting them to halves, quarters, eighths and sixteenths.

The SEC first imposed a deadline of July but the Nasdaq asked for more time, saying its computers wouldn't be ready to make the change.

http://dailynews.yahoo.com/h/ap/20010312/bs/decimalization_nasdaq_3.ht ml

-- Tess (webwoman@iamit.com), March 12, 2001.