The New York Stock Exchange yesterday unexpectedly decided to take a breather in the race to offer extended trading hours to individual investors.
Previously, NYSE officials indicated they would extend trading hours as early as this summer. But after a four-hour meeting yesterday, the NYSE's 26-member board of directors voted unanimously to wait until the middle of next year.
The Big Board's move came just a week after the Nasdaq Stock Market, the NYSE's main domestic competitor, said it would begin planning to offer trading that would start at 5:30 p.m. and continue until as late as 10 p.m. The closing bell now rings at 4 p.m., though institutional investors already are able to engage in after-hours trading.
But NYSE Chairman Richard Grasso said exchange officials concluded that in order to extend hours into the evening, the NYSE would first need to grapple with other looming issues. The Big Board must get the exchange's computers ready for the year 2000 so they will not succumb to the so-called Y2K problem, in which computers may read "00" as 1900 instead of 2000. The exchange must also complete a planned conversion to a system that will express stock prices as decimals (dollars and cents), rather than as points and fractions of a point, such as one-half or one-eighth.
Officials at the National Association of Securities Dealers, which controls the Nasdaq market, declined to comment on the NYSE's decision.
Last week, NASD officials said they would prefer to coordinate plans to offer extended hours with other exchanges or trading systems. But they said they might have to act as early as this fall, despite what other large exchanges do, to match a planned move to extend hours for individual investors by smaller, rival electronic trading systems such as Eclipse Trading Inc. and Wit Capital Corp.
These rival trading systems, known as electronic communication networks, or ECNs, threaten to become strong competitors to older, established stock exchanges.
Grasso addressed that point yesterday by saying that "the introduction of longer trading has to be coupled with public trust and confidence" and that markets must preserve public confidence even ahead of responding to pressure from competitors. For that reason, he said, the NYSE will stick to its decision to wait a year regardless of what the Nasdaq does.
The Securities and Exchange Commission, which regulates the nation's stock exchanges, had no comment yesterday on the NYSE's decision. In reaction to the Nasdaq Stock Market's announcement last week about its plans for extended hours, however, SEC Chairman Arthur Levitt Jr. said the agency will work with major market participants to make sure "investor protections and market integrity" are addressed.
Officials from the NYSE and the NASD would not comment on whether representatives of the two exchanges discussed the NYSE's decision before it was announced yesterday.
Under the extended trading plans being discussed, investors would probably be able at first to a select group of stocks (such as the 100 most actively traded Nasdaq stocks). But many details remain to be worked out.
CAPTION: NYSE Chairman Richard Grasso, right, announces a delay in the debut of extended trading hours, saying the exchange would first need to deal with other issues. At left is William Johnston, the Big Board's president and chief executive.