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Fossella on decimal switch
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March 24, 2000: 2:43 p.m. ET
House Commerce Committee member speaks about killing off fractions
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NEW YORK (CNNfn) - As a member of the House's Commerce Committee, Rep. Vito Fossella, R-N.Y., has been tackling securities-industry reform. He got interested in the switch from pricing stocks in fractions to decimals as a result, when he started hearing the industry wasn't ready to convert July 3, as ordered by the Securities and Exchange Commission.
Decimals are coming to Wall Street. But the specifics of how the switch from fractions will happen, and the timing of when it will happen, are subject to change. CNNfn.com asked Fossella where the decimal switch stands.
CNNfn.com: Why did the push for decimals have to come from Congress?
Fossella: There are those who don't want to convert to decimals, who say it's not a big deal. And there are those who feel it will benefit the investing public.  Be that as it may, conversion is inevitable. I'm not the biggest fan of meddling in one of the most efficient capital markets in the world. Clearly there are those who thought legislation was required. But it's one thing to have a date and a goal, and it's another to have reality. If this is going to happen, let's make sure the investing public is protected and the markets are not in disarray. This worship of this arbitrary date, July 3, may not be possible in some quarters.
CNNfn.com: What is holding up the launch?
Fossella: Capacity is a real issue that is compounded on the options exchanges. From a technological point of view, the markets and some of the vendors feel they may not be able to handle the capacity on July 3. It's just a matter of ensuring that the systems work. Many have been trying to make that conversion in good faith, I believe, making the investments, getting the capital. There's a cost to the exchanges and the markets, which ultimately is a cost to investors.
CNNfn.com: Was the SEC hasty in insisting on conversion by July 3?
Fossella: I'm not one to point fingers or assess blame at this point. Right now the plane is going to land. We've got to make sure the plane is going to land safely. Who made the decision and why the decision was made at this point is old news. We have to hope the industry is able to fix these problems and move forward.
CNNfn.com: Do Nasdaq's market makers have a vested interest in delaying decimals as long as possible?
Fossella: There's a good-faith effort to make the conversion. And I'm going to take them at their word that they're trying to achieve this. It's going to happen. There are participants out there that claim they can't make the change. Sooner or later the forces in Congress that pushed for decimal pricing, and the SEC, are going to move. If it's demonstrated that someone is not operating in good faith, it's going to be exposed, and the price will not be something they're willing or want to pay. I think they recognize that.
 CNNfn.com: Has it hurt U.S. markets that other nations are ahead?
Fossella: I don't get too shaken up that other countries are trading in decimals are we're not. Let the market forces drive, and what the investing public are willing to withstand, without compromising the safety and soundness of those markets. There is an argument that they [decimals] are easier to understand for the ordinary investor. It hasn't been a battle cry, however. There are a lot of bright people who work in the financial-services industry. If those participants thought they were going to lose market share, they would use everything in their power to get up to speed.
CNNfn.com: And if those participants were going to see their profit and spreads cut, wouldn't they use everything in their power to stop that?
Fossella: In very parochial instances, that's a position people are going to take, yes. Making money and the capitalist way is not so bad. That's the person's prerogative. We must make sure the markets are safe and sound, but the less government gets involved, the better. The prudent and watchful eye of a sophisticated investing class is the best barometer and the best indicator and the best arbitrator of what is good and bad in the marketplace.
CNNfn.com: What is your best estimate on when decimal pricing will arrive?
Fossella: July 3 is still the goal at this point. I wouldn't be surprised if something in September or October would be in order. Let's listen to where the industry, the people who have to invest the capital, work six- or seven-day weeks to make the conversion. If they're making their best effort, let's be sensitive to that. I will probably know better in a month or so, if not sooner. 
-- interview by Staff Writer Alex Frew McMillan
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