After months of racing each other to roll out after-hours trading, the rival New York Stock Exchange and the National Association of Securities Dealers agreed to coordinate on how to sell stocks after dark and before dawn.
With the Securities and Exchange Commission serving as a referee, officials at both exchanges held a marathon meeting today and emerged with a plan to study how extended hours would affect the markets and the public -- effectively pushing off any extended hours until well into 2000.
More than 40 people from the securities industry attended the conference. That included representatives from exchanges, clearing organizations, consumers groups and small electronic exchanges that started the brouhaha by eating into the business of markets with systems designed to function around the clock.
"The markets need to analyze after-hours trading and coordinate on a plan before opening the doors to this," New York Stock Exchange Chairman Richard Grasso said after the summit.
The exchanges had begun aggressively planning to extend hours, under pressure from West Coast investors who wanted to continue trading later in the day and from overseas markets. Several alternative exchanges are awaiting approval from the SEC to operate as full-fledged exchanges that could provide after-hours trading.
The board of the New York Stock Exchange recently voted to delay any after-hours trading until the third quarter of 2000. Among the reasons: It must first grapple with any potential year 2000 computer problems and switch next year to stock prices quoted in decimals instead of fractions. Grasso said today that he plans to stick by his timetable.
Nasdaq had planned to begin as early as September. Frank G. Zarb, head of the National Association of Securities Dealers, which governs the Nasdaq, did not specify a new schedule, but clearly backed off on the current plan. "It is very likely we would aspire to a uniform date," he said.
The change of heart came after SEC Chairman Arthur Levitt Jr. warned that investors would become confused if the exchanges were open different hours. "It is our collective goal to maintain the integrity of the markets and to protect investors," Levitt said.
At the summit, the NYSE and NASD formed four working groups to study the issues around after-hours trading. Preliminary findings will be announced in eight weeks, with a report on options trading to follow.
Among the biggest concerns has been the lack of liquidity -- meaning customers and their money -- late at night. Also, consumer advocates are concerned about how well markets would be regulated late at night and how smaller firms would fare.
"We're now a nation of stockholders and the markets are reacting by offering convenience just as banks did by installing ATMs," said Peter C. Hildreth, New Hampshire's director of securities regulation and president of the North American Securities Administrators Association.
The delay comes as a relief to many small firms that feared they could not staff well enough to compete around the clock.
"The industry almost unanimously opposes after-hours trading," said Alan Davidson, a NASD director, who is president of Zeus Securities Inc., a small brokerage firm in Jericho, N.Y. "It's bad for firms, big and small, and damaging to the public."