NEW YORK -- Nearly three weeks after shifting all of its trading to decimals, the New York Stock Exchange is setting up a committee to address complaints and concerns about its new policy.
But it will be likely be April before any changes might be made to the way NYSE trading floor operates, chairman Richard Grasso said Friday.
"One doesn't make structural changes based on three weeks experience, however challenging that experience might have been," Grasso told a news conference.
Grasso spoke after a private meeting with about 30 representatives of the NYSE's various constituencies, including traders, institutional investors and specialists. Grasso declined to be specific about the meeting, other than to say several ideas are being discussed about the best ways to identify problems and arrive at solutions.
Some of the exchange's biggest customers have recently complained that trading stocks in penny increments rather than the fractions used prior to the conversion is putting them at a disadvantage because of some specialists' actions.
The use of decimals means that stocks can be priced at 100 different points per dollar, for example $14.34 and $14.67, instead of just the increments of 1/16, such as $14 1/16 or $14 3/16.
The problem, some instutitional investors maintain, is that their efforts to buy large blocks of stock on the market are being blocked by specialists who "step in" and at the last minute and bid a penny higher to buy stocks that institutional investors would have gotten otherwise. The specialists then resell the same shares at a higher price.
Specialists, who are the exchange's equivalent of auctioneers, routinely buy and sell stocks to keep the market moving, and deny any wrongdoing. Institutional investors represent billions of dollars in assets for mutual funds, pensions and other plans that make up many Americans' portfolios.
Grasso said it's too early to know whether the issues being reported are structural or just part of the adjustment period, but he takes the complaints and concerns seriously.
The shift to decimals completed Jan. 29 was part of an industry-wide change ordered by the Securities and Exchange Commission, which oversees the markets. The federal agency mandated the change, saying penny pricing would make trading easier for investors to understand and make stock prices more competitive.
The Nasdaq Stock Market is expected to convert its trading to decimals by April 9, the SEC deadline.
SEC approval would also likely be a precondition of any significant shifts in the NYSE's policies.
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