Definition of Decimalization

There was a time, not that long ago, when the major US market indices (DJIA, S&P 500 and NASDAQ) all traded in fractions.

That's right - instead of buying a stock for $30.05, you were buying a stock for $30 1/16 or $30 1/8.

Decimalization Definition - Finance DictionaryIn June of 2000, the SEC made the announcement that decimal trading would need to be implemented on the major US exchanges by April 9th, 2001. The NYSE and NASDAQ began pilot programs in decimal trading on September 5th, 2000.

At the time, federal regulators announced that the change to decimalization from fractions trading would save "ordinary" investors $3 million in commissions PER DAY.

If you were around for the "dot-com" boom in the late '90s and early '00s, then you likely remember trading your favorite stocks in fractions rather than decimals. You aren't dreaming - the change was made in 2001.

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