You can count your savings in dollars and cents but, oddly enough, not your stocks.

Stock prices have been quoted in decimals for centuries in France and for decades in Israel, Mexico and around the globe. Canada stubbornly held out until three years ago. But the United States has traded in investor-unfriendly fractions for more than 200 years.

But yesterday, the New York Stock Exchange board of directors voted to change its rules so that next year it can begin to quote its stock prices in dollars and cents, with price differences as low as a penny. The National Association of Securities Dealers, parent of the Nasdaq Stock Market, also is preparing to move to decimals next year.

Because of quirks in the way money is made in stock trading, the move to decimals is expected to lower investor costs, perhaps dramatically. The cost of a trade could drop to a penny a share for heavily traded stocks, from the current 6.25 cents.

After a while, those pennies can add up to real money.

So why has the United States dragged its feet for so long? Decimals are likely to mean that dealers will make less money on each trade, although they may be able to make up for that loss through increased volume as new investors are lured to the market by the lower costs.

Big Board Chairman Richard Grasso said the move to decimals is necessary if U.S. stock markets are to be competitive in the global equities world. He said decimals will make the NYSE more efficient, enabling it to attract more trading orders. In addition, because all foreign stock markets trade in decimals, the U.S. must change to compete for global business, he said.

Richard G. Ketchum, NASD president, said, "Moving to decimalization is the right thing to do." But he said there are several issues, including questions of computer capacity, that need to be resolved to protect investors.

To understand why decimals will cause this upheaval, it is necessary to understand how dealers make profit. Dealers, or market makers, link stock buyers and sellers and keep trades flowing by selling and buying inventories of stocks they hold. Traders' profits come from selling stocks at higher prices than they paid for them. This difference is called the "spread."

For years, if traders wanted to raise or lower bids they had to change the price by a minimum of one-eighth of a dollar, or a spread of 12.5 cents. Two years ago, under pressure from Congress, the U.S. stock markets reduced the minimum amount that prices could vary to 1/16th (6.25 cents). "Transaction costs have come down immeasurably since then," said Gus Sauter, managing director of Vanguard Group mutual funds.

The conversion to decimals will probably drive the trades to penny increments for heavily traded stocks.

One potential side effect is that smaller spreads will put the brakes on a practice that has been criticized by the Securities and Exchange Commission--payment for order flow. When dealers have large spreads, they can use some of those profits to get brokers to send trades to them. These legal bribes have provided the revenue that has enabled online brokers to offer discount commissions. Thus it is possible that commissions might rise after the switch to decimals.

Meanwhile, smaller, non-Internet companies might have more trouble raising money through the securities markets. "If you are a market maker and spreads are being squeezed and you have 10,000 stocks to choose from, you are going to make markets in the stocks that make the most money," said James J. Angel, an associate professor of finance at Georgetown University.

Some Wall Street officials said that the spreads of less heavily traded stocks will probably remain wider, to provide sufficient profits for dealers to handle those securities.

But others argued that, at least temporarily, trading in smaller stocks might dry up. "We have to be very careful as we go forward because we're changing the way these stocks will be trading," said F. Van Kasper, president of First Securities Van Kasper & Co.

A larger problem is that many market participants expect "order jumping" to surge as trading moves to penny increments. Order jumping works like this: Say you have a large offer to buy stock XYZ at $20. A trader notices your big order, and offers $20.01, thus "stealing" the order from you. If XYZ's price rises after your purchase, he makes money. If he's wrong, he's only out a penny a share.

Large investors say this will force them to change their trading strategy. Many expect to chop up their trades into small orders, such as 100-share orders, that will attract less attention. The result will be a tremendous surge in the volume of trades and quotes, especially because the number of price points within a dollar where a stock can be traded will jump from 16 to 100.

A study by SRI Consulting of Arlington found the conversion to decimals would cause the number of trades in listed securities to jump by 80 percent and the number of quotes to soar by 139 percent. Volume in the options market would skyrocket far higher.

That raises another question: Can the stock markets' computer networks handle this? The stock exchanges and their members are spending millions of dollars to upgrade their computer systems to try to prepare for the surge in volume.

The Securities Industry Association is trying to work out a schedule for phasing in decimals to allow sufficient testing and minimize disruption. Under the current proposal, stocks of several dozen companies would begin trading in nickel increments in July, and other stocks would be phased in over three months. By October, stocks would trade in whatever increments the stock markets decided to allow.

Some market participants are lobbying for a longer nickel transition period. Others are hoping the SEC will set a permanent floor of a nickel. A nickel increment would not be too different from 1/16th, and thus would minimize disruptions. But the SEC is unlikely to take an action that would be viewed as anti-investor, according to several sources.

"We believe that trading will go to the penny probably in the fall," Grasso said.

Nasdaq, too, assumes trading will go to pennies, Ketchum said. "We just think there should be a careful look at the capacity issue to see what kind of phase in period is appropriate, so that this proceeds in a fair and orderly way that protects the investors."