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Tuesday, May 25, 1999

NYSE may extend trading hours to 9 p.m. by July
Small firms say later session unfair because they won't be able to compete
By Noelle Knox
Associated Press

  NEW YORK - The chairman of the New York Stock Exchange said Monday the Big Board may extend trading hours starting in July, giving investors more time to buy and sell stocks.
   The NYSE is not alone. The Nasdaq Stock Market will vote this week on a plan to create a second trading session from 5:30 p.m. to 9 p.m. Eastern time. And Eclipse Trading Inc., a new trading company, plans to offer after-hours trading from 6 p.m. to 9 p.m. by fall.
   "The New York Stock Exchange owes its customers the same level of service," said Richard Grasso, chairman and chief executive officer of the NYSE. The NYSE board will consider its options during its June 3 meeting.
   The concept of expanded trading hours, while simple, has sparked a complex debate from Wall Street to Washington.
   Investors, many in different time zones, want more time to react to news. At Charles Schwab, the nation's largest online brokerage, for example, between 20 percent and 25 percent of its customers' orders are placed either before the market opens or after it closes.
   "Because we have a large West Coast clientele, extending hours is something we have an interest in," said Marta Von Lowenfeldt, a spokeswoman for Charles Schwab, which is based in San Francisco.
   Lobbying against longer hours, however, are numerous small brokerage firms that don't have the resources to meet the demands of late night and early morning business.
   Alan Davidson, president of the Independent Broker-Dealer Association and a governor of the National Association of Securities Dealers, said he will vote against Nasdaq's second session.
   He said he has canvassed small brokerage firms across the country, and "I have yet to see one hand go up in favor of this," adding, "I consider it to be an anti-small business measure."
   Extended hours also would create a challenge for the financial media to produce stock listings for their publications.
   The Associated Press is making preparations for a longer trading day but it has been unclear how the exchanges would report price information from late sessions.
   Nasdaq's board of directors will vote on the measure Wednesday. If it passes, it will go before the 33-member board of governors for the National Association of Securities Dealers for a vote Thursday. If approved, the measure will be referred to the Securities and Exchange Commission.
   Arthur Levitt, chairman of the Securities and Exchange Commission, however, has said repeatedly that stock exchanges should wait to make changes to their trading days until after Jan. 1, to limit the impact of any computer problems associated with the year 2000. He also wants a smoother transition to the widespread use of decimal pricing of stocks, compared with the current reporting in fractions.
   But pressure is mounting on Levitt and all of the traditional exchanges to wake up earlier and burn the midnight oil.
   Alternative markets, like Eclipse Trading and Instinet, give investors and institutions a chance to trade when the markets are closed.
   Eclipse Trading, which will cater to individual investors, was founded by Eugene Choe and Michael Satow, both former SEC enforcement lawyers. Satow, president of Eclipse Trading, said he worked on a lot of insider information cases, where people buy or sell a stock based on information that is not public.
   While after-hours trading is legal, it has been largely the privilege of mutual funds, pension funds and other large institutions. "Such a huge amount of news comes out after hours, and individuals, up until now, have largely been excluded from trading opportunities," Satow said.