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Datek starts morning trades
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September 14, 1999: 5:37 p.m. ET
As Island ECN extends, online broker offers stocks 8 a.m. to 8 p.m.
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NEW YORK (CNNfn) - Datek Online, the first online brokerage to offer after-hours trading, said Tuesday it will be the first to start before-hours trading, starting Wednesday morning.
The brokerage will offer trading from 8 a.m. to 8 p.m. ET. Since it extended its trading hours in July, it has allowed customers to trade Nasdaq stocks from the close of the regular markets at 4 p.m. until 5:15 p.m. ET. Its newly extended hours also are limited to Nasdaq stocks.
Also Tuesday, the electronic communications network Island said it would extend its hours. The ECN shares a parent company, Datek Online Holdings Corp., with the online brokerage.
Island had been offering its 200 broker-dealer customers, including online brokerages Datek and TD Waterhouse, trading from 8 a.m. to 5:15 p.m. It will now match MarketXT, an after-hours ECN, by executing trades until 8 p.m. ET.
It's up to individual broker-dealer companies to decide if they want to participate in the after-hours trading that Island offers. Around 70 companies participate at the moment, trading roughly 1 million shares a day after hours. In all, Island sees trading volume of around 110 million shares a day.
And it's also up to Island's clients to offer extended trading to their customers, as Datek is doing at the retail level. Around 20 percent of Datek's trading occurs in the first 45 minutes after the traditional stock markets open at 9:30 a.m. ET, so it believes customers will take to placing trades over their eggs and orange juice.
Monday, for instance, Datek customers executed 10,530 trades in the first 30 minutes of trading, just more than 18 percent of its 57,540 total trades for the day.
"So there appears to be quite a lot of pent-up demand in the morning," Datek spokesman Mike Dunn said. The market open is a favorite time for day traders and active online traders, a market Datek courts with streaming real-time quotes and cheap trades.
So far, Datek's after-hours trading has been growing steadily since a gradual rollout starting with selected customers in July. The brokerage has 285,000 accounts, and customers execute between 800 and 900 trades in the extra 75 minutes of trading it has been offering in the evening.
Iselin, N.J.-based Datek is the fourth-largest online brokerage, behind Charles Schwab (SCH), E*Trade (EGRP) and TD Waterhouse (TWE). Island is the second-largest ECN after Instinet.
Despite concern about how liquid stocks are in extended-hours trading and how individual investors access information outside business hours, many retail online brokerages are hustling to offer after-hours trading. The online brokerages say customers have driven the push.
Like Datek, E*Trade plans to offer evening trading later this month. An E*Trade spokesman said the company will be "taking a look at" before-hours trading in response to Datek's move.
TD Waterhouse plans to offer trading in Nasdaq stocks from 4 p.m. to 6:30 p.m. via Island "on or around" Sept. 30, as soon as it finalizes its agreement with Island. It then will evaluate whether to extend those hours further.
Datek said its piecemeal approach to extended hours is driven by its effort to "empower" individual investors. "It's just increasing the trading day to meet customers' demands," Dunn said. "We'll see how it goes from here. This is new territory."
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Datek Online
Island
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