Before April 9, 2001, when the Securities and Exchange Commission ordered all U.S. stock markets to switch to the decimal system, prices were reported and stocks were denominated in fractions—in one-sixteenths to be exact. While it seems silly that it took so long for the change to occur, the earlier technique of fractional pricing is not as arbitrary as it may seem.
- Prior to a 2001 ruling by U.S. regulators that required U.S. stock markets use the decimal system, prices and stocks used to be reported in fractions—specifically one-sixteenths.
- That's because when the New York Stock Exchange began over 200 years ago, it was based on the Spanish trading system made popular in the 1600s, which was based around fractions, not decimals.
- In Spain in the 1600s, Spanish investors traded with gold doubloons, which were split in half, quarter or even one-eighth pieces so traders could count them on their fingers—while skipping their thumbs.
- When the NYSE began, 1/8 of a dollar or 12.5 cents was the spread or the smallest amount a stock could change in value; this was later changed to 6.25 cents or 1/16 of a dollar to accommodate larger trades.