February 26, 2001, 5:08 PM — Citing concerns about both technology and trading changes, a 7,700-member organization of stock traders this week asked the U.S. Securities and Exchange Commission (SEC) to delay by at least three months its April 9 deadline for converting the Nasdaq Stock Market Inc. to decimal-based pricing.
In a letter that was sent to acting SEC Chairman Laura Unger on Tuesday, Lee Korins, president and CEO of the Washington-based Security Traders Association (STA), said the current plan, which calls for Nasdaq to run pilot decimalization tests and then move to a full implementation all within a single month's time frame, is too tight a schedule.
"It is the sincere concern of many of our members that the current plan does not provide enough time to adequately test and assess the many technology and trading issues associated with the conversion," Korin stated in his letter. "[W]e urge the commission to consider a less demanding implementation schedule."
Korin said in an interview today that the New York Stock Exchange had a four-month period last year to make its transition from fractions to decimals. Nasdaq should be given a similar amount of time, he said. "We're not saying to stop [the conversion]," Korin said. "What we're saying is to take more time to implement it."
If another 12 weeks were added to the conversion process, Korin said, it would allow traders to be properly prepared and would "hardly be something to upset the whole world." Korin, who also asked in his letter that the number of scheduled test runs be increased from two to four, said he hopes to have an answer from the SEC by the middle of next week.
Under the current schedule, 15 Nasdaq-listed stocks are due to be converted to decimal-based pricing on March 12 as an initial test of the concept. Another 150 stocks are scheduled to switch over in a second pilot project two weeks later, and a full conversion of Nasdaq's 6,000 or so stocks is supposed to take place in early April.
Nasdaq spokesman Scott Peterson wouldn't comment directly on the STA's letter, but he said officials at the stock market "expect to operate according to the schedule" set by the SEC.
"We feel confident that everyone is going to be ready," Peterson said. Under a complex rollout plan, he added, several hundred financial services firms have been mandated to do testing to prepare for the changeover. "It's not as if these people are going to be walking into it cold," he said.
John Heine, an SEC spokesman, also declined to comment on the request for more time from the STA. Asked what would happen if some firms and traders aren't ready by the April 9 deadline, Heine said SEC officials "don't deal in hypotheticals."