They play an increasingly important role due to the decimalization of the stock market, whereby bids and offers are in minuscule 1 cent differentials.
One of the factors that perfected this storm, in their view, was the decimalization of the U.S. exchanges in 2000.
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In June 2001, Merrill cited the effect of decimalization on Nasdaq spreads as a cause for missing Street earnings estimates by 30%.
During that time, he testified in front of Congress regarding the effects that decimalization would have on small-cap companies in the United States.
How much of a benefit does Sauter attribute to market developments in the past 15 years, which include decimalization, high-frequency trading, increased fragmentation, Reg.
Some say that the democratization of trading, the decimalization of share prices, and the erosion of commissions led to the death of quality buy-side research.
As an SEC commissioner, Wallman was able to save investors money by championing decimalization, the listing of stock prices in dollars and cents instead of dollars and fractions.
There he witnessed several watershed moments in trading, including the decimalization of the exchanges, the splintering of the Nasdaq-NYSE duopoly and the rising role played by high-frequency traders across global markets.
So decimalization came in to basically narrow that spread, theoretically.
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Those wider pre-decimalization minimum ticks had allowed for wider spreads, and those wider spreads had paid for a professional network, which in turn did the critical work behind a successful IPO.
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Decimalization has narrowed the spread between the highest bids and lowest offers, meaning individual investors are paying less when buying stocks and getting more when selling them, much to the chagrin of Nasdaq marketmakers whose spreads have been crimped.
During the past decade, a variety of factors including decimalization, Sarbanes Oxley, the dismantling of Wall Street research departments, and the consolidation of the boutique investment banks into behemoth Wall Street firms have conspired to create structural changes to the capital markets.
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