Linking of After-Hours Systems May Take Time

As expected, eight private trading networks formally announced an agreement Thursday to link their after-hours systems. But investors may have to wait a while; the accord is vague and it’s uncertain how quickly the integration would take place.

The rival electronic systems--including Instinet, Island, Archipelago, Bloomberg Tradebook and BRUT--have signed a non-binding letter of intent to make prices of trades done by their customers visible to investors on other systems. That information is critical, because investors base their buy and sell orders in part on a stock’s last trade price.

Bigger networks stand to benefit if smaller players send orders to them, experts said. Smaller systems, by contrast, hope to draw business by guaranteeing customers the best price, even if that means routing their orders to another system.

Rather than a single accord to implement the linkage, networks must work out individual deals with each of the seven others.

Some deals are likely to come within the next few months. But one sticking point may be that some large systems may be unwilling to send orders to competitors, thus potentially slowing the process, sources said.