Does Decimalization Harm or Help Institutional Investors?

“Decimalization” – the pricing of stocks in dollars and cents instead of fractions – lauded by proponents to be a good thing for investors when it was adopted by the U.S. stock markets in early 2001, is under fire. Critics say it costs institutional investors big. But in a study co-authored by Venkatesh Panchapagesan, assistant professor of finance at Olin, direct institutional trading costs appear to have declined by about 23 basis points (roughly 5 cents a share) after decimalization.

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