New AOL Site to Open Up the After-Hours Club

After-hours stock trading is going mainstream: America Online said Thursday that its Web site will feature a new section devoted to such trading, inviting the Web’s single-biggest audience to participate.

The new service, scheduled for a Nov. 1 launch, will provide AOL’s 17 million subscribers with stock quotes and related information on trading that takes place outside the regular hours of the New York Stock Exchange and Nasdaq.

AOL members also will be able to use participating Internet brokers to connect with other investors after-hours, via an electronic trading system operated by online investment bank Wit Capital.

Wit has an exclusive six-month arrangement with AOL.

The announcement follows the recent introduction of limited after-hours trading for small investors by Datek Online Holdings and Siebert Financial Group. The NYSE and Nasdaq also are considering adding evening sessions.

Until recently, the after-hours market--buying and selling of stocks after regular trading ends at 1 p.m. Pacific time--had been the exclusive domain of institutional investors using such electronic systems as Instinet.

But other electronic systems now sense an opportunity with small investors. Datek’s after-hours session runs for only about an hour after regular trading ends. Other systems are looking at extending trading further. Wit Capital’s session may run from 3 to 6 p.m. Pacific time.

The question is how much activity there will be. Without sufficient demand from buyers and sellers, only the most popular stocks probably will be available for trading, and even then, prices may swing wildly.

As protection, most of the new after-hours systems require people to name a specific price they’re willing to pay or receive for a given stock--a “limit” order.

AOL’s move could serve as a big first step toward helping resolve the problem of thin trading.

Drawing nearly 10 million visitors per month, AOL’s “Personal Finance Channel” is not only one of the most popular destinations within the AOL network, but possibly the most popular financial site on the Internet.