By James Langton

(March 22 – 17:40 ET) – It looks as if decimalization may have to wait in the U.S. Sources at the Securities and Exchange Commission in the U.S. are reporting that the SEC is preparing to extend the July 3 deadline it initially imposed for markets to begin trading in decimals.

Earlier in the month the NASD told the SEC it needs an extension and the SEC asked for comment on the matter. Reports suggest that the SEC is facing up to the fact that the industry just isn’t ready to make the transition.

In a letter to SEC chair Arthur Levitt the Securities Industry Association said that it doesn’t want part of the industry to proceed without Nasdaq. “The NASD’s announcement on March 7 that it is not in a position to support a July 3 start date means that the industry cannot proceed on its original schedule. The decimal conversion team had concluded long ago that all markets needed to convert at the same time. “

The SIA does not support the idea of trading listed securities in decimals and Nasdaq stocks in fractions, until Nasdaq can catch up. It suspects that the options market would be even more confused by using two different systems simultaneously.

Rather than set hard and fast deadlines again, the SIA recommends that the SEC proceed on a more flexible basis to avoid the situation it is currently in. Instead it suggests that the SEC work with the industry to assess readiness before moving from phase to phase.