Now that shareholder value has become the mantra of American bankers, the stock exchanges are passing along to shareholders savings that used to go to brokers.
Competition has heated up between the American Stock Exchange and the Nasdaq national market, and both boards have launched initiatives to improve pricing.
Last week the American Exchange announced it would shrink minimum trading increments to 6.25 cents (one sixteenth of a dollar), from 12.5 cents (one eighth of a dollar), for all stocks at all prices.
Representatives of the exchanges, which both been trying to persuade banks to list shares with them, said the more efficient pricing and other reforms should be especially important to bankers.
American Exchange chairman Richard Syron, a former banker himself, said that bankers tend to be more familiar with the financial markets than other executives are. Additionally, top managers at banks are more likely to own shares themselves.
Stocks below $10 already are eligible to be quoted and traded in the smaller increments on all the exchanges, but such trading for stocks above $10 is new.
The change means "the stock is going to be priced much more precisely," said Mr. Syron.
Spokesmen from both Nasdaq and the New York Stock Exchange said that they are weighing similar moves. Both boards anticipate the decimalization of stock quotes being considered by Congress this week will become a reality. In addition to making market more efficient for issuers, smaller trading increments are seen as a way to help small investors get better prices for their stocks.
The Nasdaq, approaching its 26th birthday, announced this year that it would become a hybrid auction-dealer market once it adopts rules to inform investors of stock quotes that are better than market-maker quotes and to improve access to market information generally.
The Nasdaq has also devised a shareholder value review, an analysis aimed specifically at banks to help enhance visibility and sponsorship on the exchange.
"Banks are an industry that has been ignored by the investment community. This is one way to help them review to improve their visibility in the investment community," said Mark H. Foreman, director of market services at the Nasdaq. "This will be done on a case-by-case basis, for as much as the investment community wants."
The Nasdaq has also recently revamped its workstation and Internet sites.
The American Exchange meanwhile offers investor relations services to companies that list on the exchange.
Fans of the Nasdaq market say its market maker raises banks' profile with investors. "I'd rather have a wide spread with six market makers, greater visibility, and marketability," said analyst Richard X. Bove of Raymond James Associates. "On the Amex, no one has incentive to trade your stock."
But some bankers beg to differ, bemoaning problems on the Nasdaq's dealer market, where market makers have been accused of artificially inflating the bid/ask spread. The Nasdaq said it has worked to correct the problem.
Kankakee (Ill.) Bancorp switched to the American Exchange from the Nasdaq two years ago.
"We were tired of the spreads on the Nasdaq," said James G. Schneider, Kankakee's chairman and chief executive. "We like Amex's auction system better, because it brings the buyers and the sellers together. We were worried about visibility, but it hasn't affected us differently."
Though trading volume in Kankakee's stock has shrunk dramatically since the company moved to the American Exchange, the price has set new highs.
