The burgeoning electronic-trading networks are trying to tackle one major barrier to evening trading--fear.
Investment advisers and government authorities have been warning people that trading after the stock markets close--when trades and information about those trades may be scare--can be dangerous for novices.
So yesterday, in an effort to assure investors that they are getting good prices for their trades, a group of eight electronic-trading systems announced a non-binding agreement to share stock prices.
During regular market hours, the highest bids, lowest offers and last sale price of Nasdaq Stock Market shares are consolidated on Nasdaq's system. As of Oct. 1, Nasdaq's service will close at 6:30 p.m. The new agreement is intended to make this kind of information available to the investing public after Nasdaq's system closes.
"It will increase people's confidence in this market. Clearly we want people to feel confident," said Michael Satow, president of MarketXT Inc., one of the networks.
Each company will be free to decide how to use the data. Satow said MarketXT plans to develop a system where customers can see the best bid and ask prices for each of the eight networks, and be able to easily execute trades on other systems if the prices are better.
But because the agreement is non-binding, it will be up to each company to decide whether and how to make the information available. The companies are to negotiate bilaterally with one another, meaning some networks could choose not to include some firms.
Other electronic-trading networks that signed the memorandum of intent are Archipelago LLC, Bloomberg Tradebook LLC, Brass Utility LLC, Instinet Corp., Island ECN, RediBook and Strike Technologies LLC.
The networks are still figuring out how to share information on stock prices. Matthew Andresen, president of Island, said discussions are underway with outside companies that might collect the information and make it available.
MarketXT started after-hours trading last month. Island, which has had off-hours trading since January 1997, this week started a 12-hour trading day. Island said the volume of trades it handles after hours has surged in recent months, topping 1 million shares one day last week. But that's still only a fraction of the trading volume during normal market hours, and the electronic networks have been working hard to counter the fears about evening trading.
CAPTION: Matthew Andresen, president of Island ECN, an electronic-trading network, said talks are underway with outside firms on collecting data.