Extended-hours trading (or electronic trading hours, ETH) is

stock trading In finance, a trade is an exchange of a security (stocks, bonds, commodities, currencies, derivatives or any valuable financial instrument) for "cash", typically a short-dated promise to pay in the currency of the country where the 'exchange' is l ...

that happens either before or after the trading day of a

stock exchange A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for the ...

, i.e., pre-market trading or after-hours trading. After-hours trading is the name for buying and selling of securities when the major markets are closed. Since 1985, the regular trading hours for major exchanges in the United States, such as the New York Stock Exchange and the Nasdaq stock market, have been from 9:30 a.m. to 4:00 p.m.

Eastern Time The Eastern Time Zone (ET) is a time zone encompassing part or all of 23 states in the eastern part of the United States, parts of eastern Canada, the state of Quintana Roo in Mexico, Panama, Colombia, mainland Ecuador, Peru, and a small port ...

(ET). Pre-market trading occurs from 4:00 a.m. to 9:30 a.m. ET, although the majority of the volume and liquidity come to the pre-market at 8:00AM ET. After-hours trading on a day with a normal session occurs from 4:00 p.m. to 8:00 p.m. ET.

Market maker A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the '' bid–ask spread'', or ''turn.'' The benefit to the firm is that i ...

s and specialists generally do not participate in after-hours trading, which can limit liquidity. Trading outside regular hours is not a new phenomenon but used to be limited to high-net-worth

investor An investor is a person who allocates financial capital with the expectation of a future return (profit) or to gain an advantage (interest). Through this allocated capital most of the time the investor purchases some species of property. Typ ...

s and institutional investors like mutual funds. The emergence of private trading systems, known as electronic communication networks (ECNs), has allowed individual investors to participate in after-hours trading. Pre-market trading and after-hours trading is all processed through ECNs including

NYSE Arca NYSE Arca, previously known as ArcaEx, an abbreviation of Archipelago Exchange, is an exchange on which both stocks and options are traded. It was owned by Intercontinental Exchange. It merged with the New York Stock Exchange in 2006 and now ope ...

Financial Industry Regulatory Authority The Financial Industry Regulatory Authority (FINRA) is a private American corporation that acts as a self-regulatory organization (SRO) that regulates member brokerage firms and exchange markets. FINRA is the successor to the National Associati ...

(FINRA) members who voluntarily enter quotations during the after-hours session are required to comply with all applicable limit order protection and display rules (e.g., the

Manning rule The term Manning rule is the informal name for a financial industry rule in the United States: Financial Industry Regulatory Authority (FINRA) regulation, Rule 5320. It prohibits a FINRA member firm from placing the firm's interest before/above the ...

and the SEC order handling rules).

References

External links

* Share trading {{Econ-stub

See also

References

External links