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E*Trade seeks after-hours
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August 17, 1999: 5:30 p.m. ET
Online brokerage links with Instinet to extend trading period
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NEW YORK (CNNfn) - Online broker E*Trade Group Inc. is teaming up with Instinet Corp. to provide after-hours trading in the United States, the companies said Tuesday.
Instinet, which is owned by Reuters Group, is an international trading network that allows large-scale, or institutional, investors to make block trades in large volumes both during the day and after hours.
Instinet is the largest electronic communications network (ECN) and its chief executive officer, Douglas Atkin, said the company realizes it needed to get away from just serving large institutional investors.
"Instinet strongly believes in changing the rules of brokerage to benefit all investors and issuers," said Atkin. "We have long been committed to extending the efficiency and performance benefits to individual investors."
For its part, it was vital for E*Trade to team up with a larger partner like Instinet, according to Dan Burke, an online brokerage analyst with Gomez Advisors.
"It is very important for E*Trade to land someone like Instinet, which is a real leader," said Burke. "That's not only due to its tradition but it also has the breadth and liquidity to offer robust after-hours trading."
Conversely, Instinet gets a retail outlet which will allow it to pursue the rank and file investors which E*Trade has proven successful in signing up, said Burke.
Beginning in September, E*Trade customers will be able to make after-hours trades from 4 p.m. to 6:30 p.m. EST on both New York Stock Exchange and Nasdaq-listed equities.
E*Trade (EGRP) will charge the same commissions for after-hours trading that it charges during the normal trading session.
After-hours trading is generating a lot of excitement among the trading community. Wit Capital has struck a deal to provide after-hours trading starting in November through America Online, and both the NYSE and the Nasdaq are looking into extending their hours as well.
These firms are looking to capture the greatest share of an increasingly large pool of online investors.
According to a survey released Monday by Internet research firm Gomez Advisors, online investing is becoming much more of a mainstream activity and online traders could increase by two-thirds to 8.6 million during the next six months.
The after-hours moves are taking place in an increasingly vibrant trading climate. Companies are looking to set up their own electronic communications networks, basically electronic trading floors that hook up buyers with sellers, eliminating the brokerage middleman.
Instinet and E*Trade, along with other investors, already are involved in Archipelago. Archipelago is one of four electronic communications networks approved in January 1997 by the U.S. Securities and Exchange Commission. Others include Island, the second-largest ECN behind Instinet.
Last month, Datek Online began offering an extended trading session from 4 p.m. ET to 5:15 p.m. for Nasdaq securities.
ECNs now account for about 30 percent of the market activity on Nasdaq and others are gunning to get out ahead in the ECN race as well.
In July, a consortium which includes Fidelity Investments, Charles Schwab & Co., Donaldson, Lufkin & Jenrette and Spear, Leeds & Kellogg announced their plans for an ECN.
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E*Trade
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