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Extended-hours trading encompasses any securities transaction that
occurs outside the regular trading session, universally accepted as
the period between 9:30 a.m. and 4 p.m. Eastern time.
After-hours trading encompasses any securities transaction that occurs
after the 4 p.m. Eastern time regular session close and generally
extending until 8 p.m. Eastern time.
Pre-Market trading encompasses any securities transaction that occurs
prior to the 9:30 a.m. Eastern time regular session open, generally
accepted as the time frame running from 7 a.m. to 9:30 a.m. Eastern
time.
Regular session trading encompasses any securities transaction occurring
between the open of the U.S. equities markets at 9:30 a.m. Eastern
time and the close at 4 p.m. Eastern time.
Almost all extended-hours trading is processed through computerized
alternative trading systems (ATS), also known as Electronic Communications
Networks (ECNs). There are currently nine equity ECNs in operation,
linked to the Nasdaq National Market System through SelectNet.
ECNs are the "eBay" of the regular session and extended-hours
markets. ECNs are computerized systems that automatically match orders
between buyers and sellers and serve as an alternative to traditional
market making and "floor trading." They are also the major
vehicles for extended-hours trading. ECNs account for approximately
38 percent of all Nasdaq transactions and almost all extended-hours
trading. |
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Initially developed as private trading systems for institutional investors
and broker-dealers, ECNs have opened up their systems to varying degrees
to include a greater breadth of institutions as well as retail investors.
Today, individual investors can trade on the ECNs as easily as institutions.
The majority of stocks traded on ECNs are Nasdaq listed securities.
ECNs primarily facilitate trading in Nasdaq securities. There is limited
trading in listed securities.
There is limited trading of listed securities on ECNs due to the relaxation
of several NYSE rules. However, volume in listed shares remains small
due to additional regulatory rules.
Yes. Listed securities are available for trade in both the pre-market
and after-hours sessions, as long as there is sufficient investor
demand on the buy and sell sides.
The
ECNs currently in operation are: Instinet, Island, Bloomberg's
Tradebook, Archipelago, REDIBook, BRUT, Attain, NexTrade, and MarketXT.
ECNs currently handle 38 percent of all Nasdaq volume and five percent
of all listed volume. ECNs handle almost all extended-hours volume
which currently averages 70 million shares per day.
Lack of Liquidity. There needs to be enough traders with a large number
of shares on both the buy and sell side to result in an efficient
market with narrow spreads. In the extended-hours there are fewer
investors engaged in trading, and as a result transactions can occur
at prices that are a good deal more or less than what a particular
stock closed at during the regular trading session.
An individual's trades on an ECN are made through a broker.
Although liquidity in these stocks can be minimal at times, listed
securities are beginning to find their way on to ECNs due to the relaxation
of several exchange-related rules. Today, listed securities trading
on ECNs is growing gradually.
Convenience and visibility both domestically and globally. As investors
begin to understand that trading almost anytime and anywhere is possible
we are beginning to see the large regular session volume spill into
the extended-hours. With the information provided by MidnightTrader
investors also now have more information than ever before to make
real-time trading decisions in the extended-hours.
Each ECN has an order book, or a listing of the buy and sell orders
pending for each stock. Investors can watch on their computer screens
as their brokers input the bid or ask in the order book. As buyers
and sellers are paired up, trades are executed, and the orders are
taken off the book. Viewing the order book prior to trading enables
investors to gauge the "depth of the market" in a stock.
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Initially developed as private trading systems for institutional investors
and broker-dealers, ECNs have opened up their systems to varying degrees
to include a greater breadth of institutions as well as retail investors.
Today, individual investors can trade on the ECNs as easily as institutions.
The majority of stocks traded on ECNs are Nasdaq listed securities.
ECNs primarily facilitate trading in Nasdaq securities. There is limited
trading in listed securities.
There is limited trading of listed securities on ECNs due to the relaxation
of several NYSE rules. However, volume in listed shares remains small
due to additional regulatory rules.
Yes. Listed securities are available for trade in both the pre-market
and after-hours sessions, as long as there is sufficient investor
demand on the buy and sell sides.
The
ECNs currently in operation are: Instinet, Island, Bloomberg's
Tradebook, Archipelago, REDIBook, BRUT, Attain, NexTrade, and MarketXT.
ECNs currently handle 38 percent of all Nasdaq volume and five percent
of all listed volume. ECNs handle almost all extended-hours volume
which currently averages 70 million shares per day.
Lack of Liquidity. There needs to be enough traders with a large number
of shares on both the buy and sell side to result in an efficient
market with narrow spreads. In the extended-hours there are fewer
investors engaged in trading, and as a result transactions can occur
at prices that are a good deal more or less than what a particular
stock closed at during the regular trading session.
An individual's trades on an ECN are made through a broker.
Although liquidity in these stocks can be minimal at times, listed
securities are beginning to find their way on to ECNs due to the relaxation
of several exchange-related rules. Today, listed securities trading
on ECNs is growing gradually.
Convenience and visibility both domestically and globally. As investors
begin to understand that trading almost anytime and anywhere is possible
we are beginning to see the large regular session volume spill into
the extended-hours. With the information provided by MidnightTrader
investors also now have more information than ever before to make
real-time trading decisions in the extended-hours.
Each ECN has an order book, or a listing of the buy and sell orders
pending for each stock. Investors can watch on their computer screens
as their brokers input the bid or ask in the order book. As buyers
and sellers are paired up, trades are executed, and the orders are
taken off the book. Viewing the order book prior to trading enables
investors to gauge the "depth of the market" in a stock.
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The number of orders and price levels on the buy and sell sides.
MidnightTrader, Inc., (www.midnighttrader.com)
is the premier provider of news, data and market analysis focused
on the regular session and extended-hours markets, and the leading
aggregator of trading data from the major ECNs.
MidnightTrader provides the real-time news, analysis and aggregated
ECN data to both retail and institutional investors for the extended-hours
session, together with the changes in the price of the stock and ECN-specific
volume. To grow, the markets require increased visibility with this
constituency. More visibility equals more trading.
MidnightTrader is focused exclusively on real-time, ECN-specific regular
session and extended-hours coverage; the others are not.
While focused on after-hours trading, MidnightTrader covers actively
traded issues on all of the major equity ECNs - before, during and
after regular trading hours - with real-time equity and ECN-specific
news and analysis. MidnightTrader licenses its news and ECN data to
various content distributors, financial institutions and direct to
retail investors.
In addition to individual subscribers through its web site, MidnightTrader
delivers its content and data to traditional and online brokerages,
broker-dealers, financial portals and any others who want to add value
to their offerings with news, analysis and ECN data for the regular
and extended-hours sessions. Also, any institution that is responsible
for managing the assets of others, such as mutual funds, banks, insurance
companies and other financial institutions.
Online content distributors such as ScreamingMedia, Stockpoint, NewsWare,
COMTEX, Financialcontent.com and DTN.
The Midnight 1000 is the only index of the top 1,000 companies on
the Nasdaq by market capitalization that includes transactions made
in the after-hours markets. Other indices only cover the regular trading
day and thus do not reflect the true state of the market during the
entire trading day. |
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MidnightTrader, Inc. is the leading provider of after-hours and pre-market stock trading news, charts, quotes, alerts, personal finance, and stock market information available. MidnightTrader journalists are subject to the MidnightTrader Editorial Handbook which requires fair presentation and disclosure of relevant interests. MidnightTrader 2009, All Rights Reserved
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