When the trading bell at the New York Stock Exchange rings tomorrow at the unaccustomed hour of 9:30 a.m., instead of 10 a.m., its shrill sound will reverberate through stock exchanges across the country and around the world.
To match the NYSE's new opening time, exchanges in Toronto, Philadelphia, Chicago and San Francisco, along with the American Stock Exchange and the National Association of Securities Dealers, have changed hours, revamped personnel schedules and recycled their computer systems.
The major impact of the 30-minute change -- in this case psychological rather than financial -- will be felt on the Pacific Exchange, which already opens at 7 a.m. to coincide with NYSE hours. There, trading will begin at 6:30 a.m., requiring some brokers, traders and floor clerks get to work by 5:30 a.m., amidst much grumbling.
The decision by the Big Board will bring its trading hours closer to those of Europe and is part of an effort by the New York exchange to expand its role in the growing, and increasingly competitive, billion-dollar international equities market. As such, the change is expected to:
*Set the stage for eventual 24-hour global trading of equities, with the NYSE seeking to establish itself as a major stopover point in the flow of orders from Europe to the United States to the Far East.
*Encourage new international electronic trading links between exchanges.
*Focus continuing attention by the Securities and Exchange Commission on the regulatory and surveillance problems generated by international trading.
"The growth of securities markets is already creating round-the-clock interest in securities listed on the NYSE, and that does not stop at national boundaries or time zones," said Richard Torrenzano, NYSE vice president for communications. "The growth . . . has come from increased activity on overseas exchanges as well as greater use of U.S. markets by foreign investors."
Net foreign purchases of U.S. securities rose from $3.9 billion in 1982 to $5.2 billion in 1983, and U.S. insitutions hold more than $10 billion in foreign stocks, according to SEC figures. On Jan. 1, more than 200 American stocks were listed on the London Stock Exchange.
"This is just the beginning of the revolution," declared Harry A. Jacobs Jr., chairman of Prudential Bache securities. "It's a recognition of the changing environment of the world market structure."
Jacobs said he hoped that the NYSE eventually would extend its afternoon hours from 4 p.m. to 4:30 p.m. "The more the market is open, the more business we'll do," he said.
Jacobs' view that the extra 30 minutes would increase business is not unanimously shared. Other securities industry officials take the view that the exchanges will do about the same volume, which will be spread over a longer workday. In nine months, the NYSE said, it planned to review the longer hours to see how trading has been affected.
The last time the NYSE changed its trading hours was Oct. 1, 1974, when it moved its close from 3:30 p.m. to 4 p.m.
To Jim Gallagher, president of the Pacific Stock Exchange, the NYSE's earlier opening hour looked like "a defensive tactic." He cited forthcoming changes at the London Stock Exchange and said: "It is very clear that the NYSE is concerned about the possible erosion of business." He said he did not see the change as a prelude to 24-hour trading.
Gordon S. Macklin, president of the National Association of Securities Dealers, which has its headquarters in Washington, called the longer trading schedule "logical," and said, "What you are seeing is the evolution of a global market for equities." He noted that major firms already "move trading positions from New York to Tokyo to London through their own networks."
For the exchanges, the longer schedule should mean only "marginally more" business, Macklin said. "They will capture a little bit of that business being done offshore prior to 10 a.m.," he said.
By New York time, the London stock exchange operates from 4:30 a.m. to 10:30 a.m., closing only a half hour after the NYSE has opened. That 30-minute overlap between exchanges will be extended formally to an hour. However, there already is an unofficial overlap of several hours because investment firms in London engage in extensive "off-the-board" trading activity after the London exchange closes.
Jimmy Wang, a vice president of Prudential-Bache's international trading desk, said that he didn't expect that the extra half hour would cause any immediate changes in trading practices. However, he said, "We are moving gradually to 24-hour trading."
While there is a long history of 24-hour trading in foreign currencies, Wang said, interest in foreign stocks -- especially among Americans -- is still developing. As yet, most business is done by large institutional firms, rather than by small investors, he noted. However, he said, more and more firms like Prudential-Bache are offering American investors access to foreign markets.
Traders looking for action after the New York equities markets close at 4 p.m. can wait for several hours until the Tokyo or Hong Kong Stock Exchanges open for their trading sessions on what is the following day in the Far East.
Along with the international impact of longer hours, new trading links between exchanges are much on the minds of securities industry officials. A new two-way eletronic link between the American Stock Exchange and the Toronto Stock Exchange was opened Tuesday.
Huntly McKay, Toronto's vice president for markets and market development, said the link would involve 36 Canadian stocks listed on both exchanges and will provide faster trades in a broader market at less cost. The link, an AMEX spokesman said, will permit specialists on either exchange to buy and sell at the best price available on either exchange.
Gold and silver options are traded 20 hours a day through Amsterdam, Montreal, Vancouver and Sydney. The Chicago Mercantile Exchange may add stock index futures to its present commodities links with Singapore.
The NYSE said it is studying possible trading links with the London Stock Exchange. But its discussions with the Pacific Stock Exchange about linking with it apparently have been put on hold. Charles Rogers, senior vice president at the PSE, said of the discussions, "It's not going anywhere" because "neither membership wanted it."
The NASD's Macklin said that his over-the-counter exchange also is talking with London about electronic links between the two exchanges. Macklin, who now presides over an electronic marketplace, forsees something similar developing internationally in the future. "I don't think you're going to have people standing in marble buildings shouting at each other," he said.
The Philadelphia Stock Exchange, which operates a foreign currency options market from 8 a.m. to 2:30 p.m., expects those options to be available in London within six weeks, said Arnold F. Staloff, president of the Philadelphia Board of Trade.
In the securities industry, opinion on whether the NYSE should have extended its hours was divided. Retail brokerage firms, whose employes are on the job long before 9:30 a.m. generally favored the move. Firms whose employes work on the floor of the exchanges generally were unhappy with the move, believing that the extra work and costs would not produce extra benefits.
At the Securities and Exchange Commission, Richard Chase, associate director of the division of market regulation, noted that the SEC favors the international expansion of trading but is concerned about many regulatory problems, including investor protection. In past cases of market manipulation, he noted, foreign laws sometimes made it difficult for the SEC to develop the information it needed to bring a case.
Anticipated costs of the changeover varied with organizations affected. The NYSE said it expected to spend $1.5 million a year to fund the new schedule. Other exchanges called the costs "minimal." Brokers in the Washington area, noting that most of them were on the job by 8:30 or 9 p.m., did not expect the new trading schedule to affect them.