Summary: Although the securities markets have made progress in preparing for decimal trading, some key challenges must still be overcome if decimal trading is to be implemented successfully. The capacity study commissioned by the Securities Industry Association projected that decimal trading is likely to significantly increase trade and quotation message traffic, so a primary challenge will be to ensure that the industry's communications and processing systems have enough capacity. The options markets and the Nasdaq face the greatest difficulty in preparing for the increased message traffic arising from decimal trading. Other steps that must be taken in preparation for decimal trading include developing market standards and implementation procedures, ensuring that market participants' systems are ready to process decimal prices, and revising all the rules that govern trading. These steps are still incomplete, however, and, in some cases, progress has been hampered by other issues, including an ongoing antitrust investigation of the options markets.
