3 New Players to Launch After-Hours Trading Immediately

The after-hours trading game will get three new players today when Discover Brokerage and Dreyfus Brokerage Services announce that they’re offering late trading immediately through MarketXT Inc.

The two brokerages will offer extended trading Monday through Thursday from 3 to 5 p.m. Pacific time. Customers will initially be able to trade stocks in the Standard & Poor’s 100 and Nasdaq 100 indexes. The hours and number of available stocks will eventually be expanded, the companies said.

MarketXT, formerly known as Eclipse Trading, provides an electronic system through which after-hours trades are completed. It is part of a crowded field of companies scrambling to establish a presence in the nascent after-hours market catering to individual investors.

Datek Online Brokerage Services began offering late trading last month. And several companies such as E-Trade Group and Wit Capital have announced similar plans.

With MarketXT’s system, investors place “limit” orders, specifying a price at which they’re willing to buy or sell. To prevent institutions from overshadowing individuals, order size will be capped at 5,000 shares.

Unlike some competitors, MarketXT will have a two-hour lag between the end of regular market hours at 1 p.m. and the start of its session. That could prevent investors from reacting immediately to some late-breaking news.

But “the real marketplace for after-hours trading is not day traders” reacting to momentary price moves but mainstream investors executing orders at night after work, said Tom O’Connell, Discover president and chief operating officer.

A big unknown with all after-hours systems is whether there will be a sufficient number of orders at any given moment to ensure that investors can find others willing to trade with them at desired prices. To help provide that “liquidity,” MarketXT has signed up such Wall Street trading firms as Herzog Heine Geduld and Bernard L. Madoff Investment Securities. The Wall Street firms will be prepared to trade with investors in cases where an offsetting order can’t be found.

The systems with the best liquidity will eventually be the most successful, said Michael Satow, MarketXT president.

“As the newness of extended trading wears off, people will realize that this is just trading and then people will look for quality of the market and quality of the interface,” he said.

To track stock prices after hours, investors will be able to log onto the Web sites of the three companies--https://www.discoverbrokerage.com; https://www.edreyfus.com and https://www.marketxt.com--to see a list of pending buy and sell orders for any of the 200 stocks.