Competition among the national stock exchanges heated up yesterday when the New York Stock Exchange announced that it will expand trading hours 30 minutes a day -- opening at 9:30 a.m. on Sept. 30.
The aggressive move was matched moments later by the National Association of Securities Dealers over-the-counter market, but the third major exchange, the American Stock Exchange, deferred action until today.
An American Stock Exchange spokesman said its board of governors would consider a proposal to extend trading hours at its regularly scheduled monthly meeting today. Leaders of the Big Board and the over-the-counter market said their moves yesterday were the next logical step in a series of events that ultimately is expected to lead to global round-the-clock trading of securities.
The NYSE said the revision in hours was its first change in trading hours since Oct. 1, 1974, when the exchange extended its afternoon closing time from 3:30 p.m. until 4:00 p.m.
"The trend toward internationalization will greatly accelerate over the next five years," said John J. Phelan Jr., chairman of the NYSE. "And the NYSE will have to find satisfactory ways of responding to the needs and demands of expanding international markets. As investor needs change with the development of world class stocks and continuous trading, clearly the trading of domestic securities is not going to last from 10 in the morning to 4 in the afternoon."
The NYSE has been under pressure to extend trading hours from some of its larger member firms, who are anxious to capture some of the early morning trading of domestic securities that currently is taking place on overseas exchanges. As part of its overall effort to increase trading volume and facilitate 24-hour trading of securities, the NYSE and the London Stock Exchange are studying the possibility of a formal link, and the Big Board also has explored the possiblity of a merger with the Pacific Stock Exchange.
Some of the smaller NYSE member firms are not happy about yesterday's announcement, because they fear that they will not generate sufficient trading volume in the extra 30 minutes each day to make up for the increased cost of operations. Phelan responded to their opposition by saying that, "The exchange must always be mindful of increasing the operating costs of member firms, particularly smaller and medium size firms. There also is the continuing develpment of 'world class' stocks which trade on several exchanges, crossing borders and time zones and attracting round-the-clock investor interest."
Gordon Macklin, president of the National Association of Securities Dealers, said that while he was not aware that the NYSE planned to make the announcement yesterday, his exchange had been studying the possibility of extending trading hours. Macklin called the move "an idea whose time has come," since there is significant trading volume in American securities before 10 a.m. that currently is handled in Europe.
Phelan said extending hours in the afternoon could cause logistical and timing problems for many firms.