Nasdaq SelectNet System Begins Early Trading Monday
WASHINGTON (AP) _ Starting Monday, the Nasdaq electronic stock market extends the operating hours of one of its computerized trading systems for an additional 30 minutes before the regular trading day begins.
Although the early trading session will be limited to SelectNet, a system geared to brokers rather than individual investors, the move is seen as another challenge to the supremacy of the New York Stock Exchange.
The change is the second extension for SelectNet, which in May began a session between 4 p.m. and 5:15 p.m., the same time as an after-hours session on the NYSE.
Nasdaq is a computer-run system where authorized dealers trade for investors. Unlike stock exchanges, there is no central trading floor and stock prices do not fluctuate with demand. Instead, dealers trade based on current bids to buy stock and offers to sell.
As competition stiffens from overseas exchanges and trading systems, U.S. financial markets are scrambling to extend their trading hours.
The half hour trading session, in which about 4,000 Nasdaq stocks would be available for trading, begins at 9 a.m. Eastern time. The NYSE, also known as the Big Board, and other stock exchanges open at 9:30 a.m.
The NYSE tried to implement its own early trading session last year, but opposition from West Coast brokerage houses killed a proposal to open NYSE trading at 9 a.m.
Nasdaq, the nation’s second-largest stock market after the NYSE, has made several efforts to compete with the Big Board for trading volume and revenue, and has been trying for some time to win the right to trade exchange-listed securities on its own systems.
Because of previous rulings, only exchange-traded stocks listed since April 26, 1979, would be eligible for the trading, or about 2,000 issues. But those include such big names such as Nike Inc., Safeway Inc., and Anheuser-Busch Cos.
Needless to say, the NYSE and the smaller American Stock Exchange oppose Nasdaq’s plan which is still pending with the Securities and Exchange Commission.
SelectNet, which began operating in 1990, handles between 8 million and 13 million shares daily during regular trading hours, said Robert Ferri, a spokesman for the National Association of Securities Dealers, the Washington- based self-regulatory organization that runs the Nasdaq market.
SelectNet allows brokers to propose, negotiate and trade with each other through the Nasdaq stock market but it is not designed for individual investors, who would have to call brokers to trade on it.
Regular Nasdaq trading also uses computers to disseminate prices but doesn’t allow direct electronic price negotiation, so traders usually talk on the telephone.
Nasdaq also operates a 3:30 a.m. to 9 a.m. trading session based in Europe and the United States called Nasdaq International, but the system has generated little activity since starting in January. A major limitation has been Nasdaq’s inability to obtain clearance to trade NYSE-listed issues on the international system.