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MARKET SAVVY | Savvy Confidential: A Briefing for Investors

Nasdaq Board Takes Next Step Toward Extending Market Trading Hours


The board of the Nasdaq Stock Market approved a plan Wednesday to extend the electronic market's trading hours, setting up a final vote today by Nasdaq's parent organization.

The board forwarded the plan to the National Assn. of Securities Dealers even though some members questioned the need for after-hours trading, said a Nasdaq board member who asked to remain anonymous. The Securities and Exchange Commission would have to sign off on any final proposal.

Facing rival plans from the New York Stock Exchange and several upstart private companies, the NASD is considering a second daily trading session lasting from approximately 5:30 p.m. to 9 p.m. Eastern time to accommodate individual investors trading from home after work. Regular trading hours are 9:30 a.m. to 4 p.m. Eastern time.

The second session, which could start as early as September, would be an after-dinner session on the East Coast but a commute-time session for many California investors, because it would end at 6 p.m. Pacific time. But if demand is strong, the private companies that are planning to offer off-hours trading to investors later this year are expected to lengthen those sessions.

Many Wall Street firms oppose the Nasdaq plan, fearing that technical and staffing headaches would outweigh any profit potential. They also worry that the evening session would be highly volatile and thus potentially dangerous for individual investors.

"The issue is what's in the best interest of the public customer," the Nasdaq board member said. "And while some people may think it's in the best interests of those who want to trade online, it begs the question about quality of markets, supervision and regulation."

New York Stock Exchange Chairman Richard A. Grasso also has displayed mixed feelings about after-hours investing. However, many believe the idea has gained too much momentum to be turned back.

Nasdaq, for its part, may be less worried about its biggest rival than about upstart trading networks.

"Nasdaq saw a good bit of business siphoned away by Instinet, and they don't want it to happen again," said Holly Stark, who heads stock trading at Dalton, Greiner, Hartman & Maher in New York.

The Instinet system, owned by Reuters Group, has offered after-hours trading to institutions for several years and recently announced plans to open up for individual investors.

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