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Pricing stocks used to be done in fractions with 16 as the denominator because Spanish traders some 400 years ago quoted prices in fractions of Spanish Gold Dou
by sjtindell 5y ago
Pricing stocks used to be done in fractions with 16 as the denominator because Spanish traders some 400 years ago quoted prices in fractions of Spanish Gold Doubloons. Obviously decimals are superior, they allow much more accurate price discovery. What are you referring to?
- perl4ever 5y agoMostly they were quoted in 8ths. Might have something to do with the Spanish dollar being called "Real de a ocho" or "pieces of eight". Also, I think it was silver based, not gold. Doesn't "silver dollar" in old books ring a bell? I'm guessing you got your information from here: https://www.investopedia.com/ask/answers/why-nyse-switch-fractions-to-decimals/ https://www.investopedia.com/ask/answers/why-nyse-switch-fra... It's poorly written and misleading, if not technically false. "even before the decimal conversion, some ECNs permitted their customers to enter orders in penny and subpenny increments or their equivalents (e.g., in increments as small as 1/256 of a dollar)" ...from https://www.sec.gov/rules/concept/34-44568.htm https://www.sec.gov/rules/concept/34-44568.htm It appears that 8ths were the official minimum until mid 1997, which must be why I don't remember smaller fractions being very common. I feel like maybe it was mostly penny stocks that traded in smaller fractions? The following mentions stocks trading in 32nds: https://money.cnn.com/2000/03/24/investing/q_decimals/ https://money.cnn.com/2000/03/24/investing/q_decimals/
- sjtindell 5y agoI also read about it in the book Dark Pools which chronicled the story of a guy named Josh Levine who first implemented the decimal change in his pursuit of free, automated trading for average investors. He’s an absolute legend, someone I think the HN crowd would love.