If it's a revolution, it's certainly been a quiet one so far.
Yesterday, the electronic trading network Island offered individual investors the first 12-hour trading day. Island, which for more than a year tried to interest individual investors in after-hours trading, opened its doors at 8 a.m.--more than an hour and half before the New York Stock Exchange opened.
But few customers showed up to trade until after the opening bell on the Big Board. Likewise, most customers packed up when U.S. exchanges closed for business at 4 p.m.--even though Island offered trading for another four hours.
But Wall Street officials behind the after-hours push remain confident that they are making progress in convincing investors that the trading day doesn't have to ever end.
Indeed, last Thursday, Island had a trading volume of 1.2 million shares between 4 p.m. and 5:15 p.m., its previous closing time. The average volume in recent weeks has been about 800,000 shares during that time segment, and that was a big increase from earlier this year.
For active traders, there is an incentive. Many corporations release major market news after trading ends, such as when US Airways announced Tuesday that it wouldn't meet profit forecasts in the third quarter. US Airways stock fell nearly 8 percent yesterday, so an after-hours trader could have gotten a jump on other investors.
But, with so few buyers and sellers in the after-hours markets, there can be wide swings in securities prices--which is a disincentive.
"The problem is that nobody wants to trade when the market is closed," said James J. Angel, an associate professor of finance at Georgetown University. "The big players don't want to be playing unless other big players are playing, so it's a real chicken-and-egg problem."
Officials attribute some of the jump in trading volume to recent media coverage of after-hours trading. "With all the media attention there has been a real focus on the after-hours market," said Cameron Smith, general counsel for Island. "I think we expect to see this kind of growth to continue."
Smith acknowledged that 1.2 million is still small when compared with the tens of millions of shares that are traded every half-hour during the middle of the day. And Instinet, which institutional investors use to trade after hours, has a volume of about 20 million shares between 4 p.m. and 9:30 a.m.
But Smith added, "We're just at the outset." Instinet is also going after individual investors, in a deal with E-Trade, which plans to offer after-hours trading later this month. MarketXT, another electronic trading network, began operating from 6 p.m. to 8 p.m. on Aug. 25.
Michael Satow, president of MarketXT, declined to say how many investors are making trades. "We've only had 10 trading days," said Satow. But he said he expects volume to increase.
Firms such as Island, MarketXT and Instinet are betting that there are hordes of individual investors who want to trade in the evening. These electronic networks do not sell their services directly to individual investors. Instead, brokerage companies and firms subscribe to their services.
Meanwhile, the Nasdaq Stock Market and the New York Stock Exchange said they plan to extend their trading hours next year, which could bring even bigger Wall Street houses into the after-hours market.