Expanded NASDAQ Trade Time Approved : * Securities: A longer session for electronic stock trading is a major step toward global, 24-hour activity in U.S. markets.
The Securities and Exchange Commission on Thursday approved a major expansion of electronic stock trading for the early morning hours, moving another step closer toward the goal of global, round-the-clock activity in U.S. markets for investors.
The NASDAQ market, which operates from 9:30 a.m to 4 p.m. EST, will be allowed to expand from 3:30 a.m. to 9 a.m. The additional hours will begin with the opening of the London Stock Exchange and close 30 minutes before the start of trading at U.S. eastern exchanges.
Big institutional investors as well as individuals now will be able to trade through an American-run system, rather than relying on the London stock market during the hours when U.S. exchanges are closed.
The new NASDAQ service will include the trading of its regularly carried over-the-counter issues, as well as stocks listed on the New York and American stock exchanges.
The SEC voted 3 to 1 to approve the new service for the National Assn. of Securities Dealers, which operates NASDAQ.
“I’m happy to see an organization with the capabilities of the NASD compete for the (trading) activity” now carried out in London, SEC Chairman Richard Breeden said in an interview. “I doubt that many individual investors will want to get up at 4 a.m., but you can imagine situations in which institutions with a large block in a security might be prepared to do that.”
In addition to American individuals and institutions, the new system also is designed to serve foreign investors in American equities, Breeden said. “British or German or Dutch investors in U.S. equities might find benefits to making trades in this system.”
The SEC is determined to give the U.S. securities system maximum business opportunities in the competitive battle with foreign markets.
The NASD will become a “global player” in the rapidly growing international trading system, said Richard Ketchum, the organization’s executive vice president.
Firms can register to trade as European-only market makers, restricted to the 3:30 a.m to 9 a.m. session, or as international market makers, trading both in the morning and in the regular NASDAQ hours, according to the SEC.
NASDAQ International, the new service, was approved for a two-year pilot project. It was proposed in June, 1990, but had been delayed because of concern about the relatively limited disclosure of trading information, compared to the current NASDAQ system.
Each stock trade is flashed on the NASDAQ computerized system within 90 seconds of execution. But the data will be much more skimpy on NASDAQ International. It will carry the high and low prices and the total volume during the 5 1/2-hour early morning trading session. The data will be listed when the trading session ends at 9 a.m. EST.
SEC Commissioner Edward Fleischman, concerned about the limited disclosure, was the only member to vote against the plan.
But Breeden said insistence on the U.S. market rules of disclosure would have been “a rigid and unbending approach, tantamount to saying U.S. competitors should stay in the locker room rather than on the field competing.”
