"Wall St. Still Plotting After-Hours Trade"
NEW YORK (Reuters) - Is it a boy or a girl? Few on Wall Street know what its newest offspring, an after-hours trading session, will look like. But most say they are more concerned that it's healthy.
Those involved in the planning process are keeping quiet about the details. But investors probably will be able to trade U.S. stocks late in the day in some fashion this summer.
The two largest U.S. stock markets, the New York Stock Exchange and the Nasdaq, and rival electronic trading systems are racing to devise systems to tap the growing number of investors who want to trade outside the six-and-a-half-hour trading day.
Demand pales compared to normal trading. One analyst estimates it would be just 1 percent of U.S. daily volume. But the number is expected to increase sharply and is seen as a link to small ''retail'' investors, whose stature has grown as they bypass brokers and trade from home. Institutions know the early bird can set up precious relationships with traders and establish liquidity -- the lifeblood of a trading network.
U.S. Securities and Exchange Commission Chairman Arthur Levitt said he'd prefer for the issue to be shelved until the millennium bug is put to bed. But market forces are accelerating the process. If established stock markets do not act, upstarts like Eclipse Trading Inc., an alternative trading system, threaten to beat them. Eclipse is planning a 6 p.m. to 9 p.m. trading session on the Internet.
There also are worries that if trading is too thin, it would be easier to manipulate the markets, the SEC has said.
''Volume could be so thin, people could be asleep at the wheel if something happens,'' one floor trader said, worrying that adding hours to an already grueling day could invite fatigue and errors.
Currently, the dominant after-hours player is Instinet Corp., owned by Reuters Group Plc It has focused on large investors and aims to bring small investors into the fold.
A late-trading proposal goes to Nasdaq's board Wednesday. If approved by the boards of the electronic stock market and its parent, it could be up and running by this summer, subject to government approvals..."
SOURCE: © 1999 Sunday May 23 8:10 PM ET
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