DEFINITION of 'Decimalization'



BREAKING DOWN 'Decimalization'

Decimalization has led to tighter spreads because of the corresponding smaller price increments and movements. For example, prior to decimalization, one-sixteenth (1/16) of one dollar was the smallest price movement that could be represented in a price quote (this is approximately six cents, or $0.0625). With decimalization, the minimum price movement is now one cent, or $0.01, providing a greater number of price levels, and allowing for tighter spreads between the bid and the ask levels for trading instruments.

  1. Handle

    The whole number part of a price quote. In a quote the handle ...
  2. Stock Quote

    The price of a stock as quoted on an exchange. A basic quote ...
  3. Teenie

    In trading, a measure of value representing one sixteenth of ...
  4. Tick

    The minimum upward or downward movement in the price of a security. ...
  5. Pip

  6. Quoted Price

    The most recent price at which an investment (or any other type ...
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