(February 20) – “Investors and traders upset about aspects of the New York Stock Exchange’s recent switch to decimal pricing took their complaints to the Big Board on Friday, beginning a process that may lead to important modifications,” writes Gregory Zuckerman in today’s Wall Street Journal.

“But no change is likely before April at the earliest, and while NYSE officials acknowledged that some investors were beginning to take some of their business elsewhere as a result of the unhappiness, the officials also urged patience while the new trading method is fully assessed.”

” ‘This is the kickoff of a fact-finding effort,’ Big Board Chairman Richard Grasso said after the hour-long meeting with about 30 institutional investors and Wall Street traders. The NYSE heard criticism from the investors and traders and will examine ‘whatever changes need to be implemented,’ he said.”

“The NYSE organized a group including various Wall Street constituents to study the effects of the transition to quoting stock prices in decimals instead of fractions and to suggest any necessary fine-tuning. The proposals are expected to be submitted in early April, when the board of the NYSE next meets, and are likely to then be discussed with the Securities and Exchange Commission. Changes in the way stocks are traded on the NYSE will need regulatory approval.”

“The meeting, which was expected, resulted in part from complaints by some big investors and traders that it has become more difficult to trade since the NYSE switched over to decimal trading three weeks ago. Some say it is harder to tell how much buying and selling interest there is at any one time for most stocks, in part because some investors are curtailing their use of limit orders. Those are orders in which an investor specifies a set price at which he or she is willing to trade a stock.”

“One possible reason they are cutting back on such orders: Some investors have complained that NYSE specialist firms and other investors may be profiting from institutional transactions by ‘stepping in front of them’ with offers just a penny a share higher, when they know there’s a big investor waiting on the sidelines to buy the stock.”

“Under one proposal raised during Friday’s discussion, traders and investors would have to increase the price by at least five cents a share when stepping in front of ‘clean cross trades,’ where investors agree on a price in a private transaction.”