Wall St moves to evening trading

News analysis: Longer opening hours at the NYSE will `extend the lunacy', say critics

RELAXING AT his home this weekend, a mutual fund manager in New York lets out a despairing sigh. We have been discussing plans afoot to introduce evening trading on Wall Street, perhaps as early as this autumn. "It will just extend the lunacy," he says. "Wasn't it Warren Buffett who suggested opening the markets one day a year? Then maybe we could get sensible valuations instead of the madness we have now."

He is not being serious, because, like everyone else, he can see the writing on the wall. The traditional 9.30am-4pm session currently observed by the New York Stock Exchange (NYSE) and the Nasdaq is about to go the way of early closing on Wednesdays in Britain. And that may only be a first step as the New York markets look towards globalising their business.

Just how quickly all this will happen is not certain. On Thursday the owners of the Nasdaq said they will look at beginning evening sessions later this year, which probably means September. Under consideration is a second bout of trading from 5.30pm to 9pm, during which only the top 100 of the Nasdaq stocks, led by Microsoft, would be available. The announcement put instant pressure on the board of the NYSE, which meets later this week to decide its own strategy.

Richard Grasso, the chairman of the NYSE, has indicated that his exchange could be ready to make the transition as early as July, if it has to. But like many others on Wall Street, he would prefer to proceed more slowly. Ideally he would like to wait until the summer of 2000. "`What is the rush?' is my issue," he asks. "And what are the costs in terms of investor protection?"

Indeed, it is tough to find any enthusiasm on Wall Street for the longer hours. Small brokerage firms worry, for example, about the sheer expense of keeping open and staffing themselves with brokers and backroom record keepers to accommodate night-time operations.

Others, including Mr Grasso, wonder at the wisdom of such upheaval when the industry is preparing for the year 2000 and the possible disruptions that will bring, as well as plans to move from fractions to decimals in stock quotations.

Meanwhile, there is concern that the new trading sessions will, at least at the outset, attract only light volume and liquidity. That, in turn, could lead to wilder swings in prices. Increased volatility could be especially dangerous for individual investors.

And yet it is the small players who are most eager for the change. Charles Schwab, America's hugely successful discount broker, said last week that 70 per cent of its customers would like to be able to trade in the evening hours, when many of them are just returning home from work.

In an instant poll conducted last week by the financial news channel, CNBC, 53 per cent of viewers said they wanted late-hours trading while only 31 per cent opposed it.

To an extent, the exchanges can also claim to be reacting to the huge growth in Internet trading. Online share trading businesses calculate that 40 per cent of orders are placed after hours but execution of those orders has to wait until the next day. What is really driving the NYSE and Nasdaq to embrace longer hours is stiffening competition and the fear of losing business. "It's globalisation or vaporisation," says Mr Grasso.

The pressure is coming, above all, from private trading systems and electronic communications networks, called ECNs, which create their own virtual markets by matching the buy and sell orders of individual customers. Increasingly, the ECNs are encroaching on the main exchanges.

The Goliath of after-hours trading on private networks is the Reuters- owned Instinet. For now, only institutional investors can trade on Instinet after the closing bell. The company, however, may soon offer its services to private investors.

More immediate, however, are the manoeuvres of the New York-based Eclipse Trading. It recently announced plans to offer after-hours trading to individual traders from 12 July this year. If the NYSE plunges into evening trading this summer, it will be thanks to Eclipse.

Richard Schenkman, the chief operating officer of Instinet, says colliwobbles about extended hours are natural but that they will pass. He recalls the scepticism that greeted the notion of 24-hour opening for US supermarkets. Today shoppers cannot conceive of being without such conveniences.

"As you change the market, you also change the behaviour of the market," Mr Schenkman says. "When things are easier, you do it more often. When they're more difficult, you do it less. It's a fact of life."

Marc Beauchamp, spokesman for the North American Securities Administrators Association, sees it in a similar light. "We're now a nation of stockholders and the markets are reacting to that by offering convenience - just as banks did by extending hours and installing ATMs [cash machines]," he says.

For its part, the NYSE may even introduce not one but two additional sessions, an evening one and an early morning one. The first would run from 5am (New York time) until 9am, aiming to capture as many investors in Britain and Europe as possible. At night, the exchanges would be looking towards the US west coast, the Pacific Rim and Asia.

Capturing overseas investors will be necessary to ensure sufficient levels of liquidity in the new sessions. More important, however, will be firing the enthusiasm of mutual fund managers.

News
Alan Bennett has criticised the “repellent” reality shows which dominate our screens
tvBut he does like Stewart Lee
Life and Style
The Google Doodle celebrating the start of the first day of autumn, 2014.
tech
Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
Sport
David Moyes and Louis van Gaal
football
PROMOTED VIDEO
News
i100
Life and Style
Vote with your wallet: the app can help shoppers feel more informed about items on sale
lifeNew app reveals political leanings of food companies
News
Former Governor of Alaska Sarah Palin, left, with her daughter, Bristol
newsShe's 'proud' of eldest daughter, who 'punched host in the face'
Sport
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
rugby
Arts and Entertainment
Salmond told a Scottish television chat show in 2001that he would also sit in front of a mirror and say things like,
tvCelebrity Trekkies from Alex Salmond to Barack Obama
Life and Style
Carol O'Brien, whose son Rob suffered many years of depression
healthOne mother's story of how London charity Maytree helped her son with his depression
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
The cover of Dark Side of the Moon
musicCan 'The Endless River' carry on the tradition? See for yourself
Life and Style
food + drink
News
Rob Merrick's Lobby Journalists were playing Ed Balls' Labour Party MPs. The match is an annual event which takes place ahead of the opening of the party conference
newsRob Merrick insistes 'Ed will be hurting much more than me'
News
A cabin crew member photographed the devastation after one flight
news
Voices
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

Day In a Page

Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits