Cheaper Trades, Shares in the Dow

Breezes of change are sweeping Wall Street.

The New York Stock Exchange (NYSE) says it will move toward quoting stock prices in dollars and cents instead of fractions.

As an interim step, the NYSE will quote stock prices in increments of 1/16, instead of the current 1/8, worth 12.5 cents. That change could come by month's end, with the switch to decimals expected within a year.

Analysts expect some benefit for small investors. Quotes in increments smaller than 1/8 narrow the gap between the buying and selling prices for stocks.

The savings could total $2 billion a year, analysts say.

The changes were announced late last week, with no immediate word from the Nasdaq market and American Stock Exchange on plans to follow suit.

Separately, Dow Jones & Co. says it will license its famous stock index, the Dow Jones Industrial Average.

Investors will soon be able to buy products based on the 30 stocks in the Dow, including a mutual fund-like product sold on the American Stock Exchange. The other investment products include futures, options, and options on futures.

"Dow Jones has decided that there is no reason why it shouldn't profit from licensing its name," says Larry Wachtel of Prudential Securities, much as Standard & Poor's does with its S&P 500 and 100 indexes.

For investors, the new products mean the ability to invest directly in the direction of the market - measured by the Dow.