EXTRA! EXTRA! (Today's Feature Headlines)
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24/7 INTERNET TRADING MAY BE HERE BEFORE YOU KNOW IT
By John Dawe
This week Stock Exchanges and Markets on both sides of the 49th parallel entertained discussions which may ultimately lead to a twenty four hour a day, seven day a week trading regime becoming standard practice in North America.
To the south, The Wall Street Journal reported that Instinet, a unit of British electronic information service Reuters Group PLC, has undertaken informal discussions with the National Association of Securities Dealers regarding creation of a system to centralize NASDAQ trading. Instinet currently operates the largest Electronic Communications Network (ECN) in the U.S. and trades approximately 15% of NASDAQ's volume. An ECN is a private trading network that is accessible by institutional traders and is open for business at all hours. Under the arrangement, Instinet would create a “consolidated limit-order book” for NASDAQ which would centralize customer buy and sell orders and process trades within pre-set price ranges.
Instinet also revealed this week that it has had discussions with the NYSE aimed at developing a similar venture. Over the last year the NYSE has become increasingly concerned about the competition it is facing from the NASDAQ, which is home to many of the biggest, and highest profile technology and Internet issues. These discussions may be part of musing by the NYSE regarding extended trading hours and follow on the heels of similar overtures which have taken place directly between the Big Board and NASDAQ. Taken as a whole, they appear to indicate the beginning of a major change in direction for traditional trading markets in the U.S.
To the north, reports have circulated that the Toronto Stock Exchange would follow any move by the NYSE to extend its trading hours and that the Montreal Exchange may also follow suit. Quoted in the National Post, Paul Bates, President and CEO of online broker Charles Schwab Canada Inc. and a governor of the TSE said, “I can see potentially the creation of virtual 24-hour trading. The issue is, how much of value is it and is there enough potential volume, with the associate fees that go with that volume, that makes it a viable proposition.” However, at present there do not appear to be any tangible plans underway for creation of a full-fledged electronic
market to support round the clock trading on the Canadian senior markets.
On the other hand however, there is an initiative in play that would see the creation of a national junior exchange under an electronic trading umbrella. This project is aimed at both rationalizing the small cap markets in Canada and creating a more efficient conduit for junior companies to migrate to the Canadian senior markets as they mature. The project is being championed by the Alberta Stock Exchange and Tom Cumming, ASE President and CEO, has reported that it has received initial support from The Toronto Stock Exchange, The Montreal Exchange and the premiere small cap market in Canada, The Vancouver Stock Exchange. Further news is expected regarding the viability of this arrangement as the plan goes forward for approval
by the boards of the respective exchanges over the next two months.
Although discussions on both sides of the border regarding creation of new cyber trading regimes are in their infancy, it is clear that the established stock exchanges and markets across North America have this on their ‘to do' lists for the near future. 24/7 trading is on its way and the only real question now is ‘how long will it take before it's complete?'. Just as with banking through automated teller machines, it's not hard to imagine that soon we will be startled to look back and remember that a few years ago we had to wait until ‘the market opened' in order to do a trade. |
