Discover, Dreyfus climb on after-hours trading bandwagon
By Reuters
Special to CNET News.com
August 25, 1999, 10:30 a.m. PT
NEW YORK--Internet brokerage Discover Brokerage and smaller Dreyfus Brokerage Services today became the latest Web brokers to offer individual investors stock trading after the regular U.S. markets close.
San Francisco-based Discover, which is owned by securities and credit card company Morgan Stanley Dean Witter, and Dreyfus, which is owned by Pittsburgh-based Mellon Bank, said customers would be able to buy and sell the 200 most widely traded U.S. stocks between 6 p.m. and 8 p.m. ET starting this evening.
The announcement, which followed similar plans by other brokerages, is regarded as one of the first steps toward round-the-clock stock trading for individual investors. New York markets now close at 4 p.m. ET, although both the New York Stock Exchange and Nasdaq plan to extend those hours.
The scramble to offer after-hours trading coincides with sweeping changes in U.S. share trading. Over the past two years, electronic communications networks (ECNs), or computerized trading systems that match stock orders, have grabbed 10 percent to 25 percent of the Nasdaq's share volume.
Discover and Dreyfus will send customer trades to an electronic stock trading system called MarketXT, a New York company formerly known as Eclipse Trading. Morgan Stanley, Citigroup's Salomon Smith Barney securities unit, specialist firm Herzog Heine Geduld, and stock trading firm Bernard L. Madoff Investment Securities will be the market makers, offering to buy and sell stocks at posted prices.
Discover and Dreyfus are the latest online brokers to give individual investors access to after-hours trading, which previously had been the purview of big financial institutions and money managers.
Datek Online already offers customers limited after-hours trading in Nasdaq stocks through Island ECN, an electronic stock matching system majority-owned by Datek.
E*Trade Group recently said it would offer extended trading starting in September, through the network operated by Instinet, the brokerage owned by London-based news and financial data company Reuters Group. TD Waterhouse Group last week said it would offer the service within the next six weeks.
Discover and Dreyfus executives said they picked the time slot because it was convenient for customers who wanted to trade when they came home from work. It also avoided the often frenetic stock trading just after the close. Currently, most after-hours trading takes place in the half-hour after the close of regular New York markets, spurred by big money managers reacting to news or adjusting their trading positions.
"It's really a protective thing. If there's a broad understanding of the market [ by retail investors], we'll move into those hours as well," O'Connell said. "Eventually, we're aiming for 24-hours trading."
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