Extended-hours trading

Not to be confused with Late trading or Aftermarket (finance).
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Extended-hours trading (or electronic trading hours, ETH) is stock trading that happens either before or after the trading day regular trading hours (RTH) of a stock exchange, i.e., pre-market trading or after-hours trading.[1]

After-hours trading is the name for buying and selling of securities when the major markets are closed.[2] Since 1985,[clarify] 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 (ET).[3] 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.[4][5] After-hours trading on a day with a normal session occurs from 4:00 p.m. to 8:00 p.m. ET.[5] Market makers and specialists generally do not participate in after-hours trading, which can limit liquidity.[6]

Example chart of extended-hours trading, via Google Finance

Trading outside regular hours is not a new phenomenon but used to be limited to high-net-worth investors and institutional investors like mutual funds.[7] 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.[8]

Financial Industry Regulatory Authority (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 and the SEC order handling rules).[9]

  1. ^ "Extended Trading".
  2. ^ Sulthan, .A (2017). Stock Market Dictionary (1 ed.). Sulthan Academy. p. 229. ISBN 978-1522022862.
  3. ^ "About Us: History". NYSE. Archived from the original on 2010-06-18. Retrieved 2007-04-11.
  4. ^ "Pre-Market Trading". Investors Underground. 19 July 2016. Retrieved 11 November 2016.
  5. ^ a b "Nasdaq Trading Schedule". NASDAQ. Retrieved 2011-08-02.
  6. ^ "After Hours Trading". Investors Underground. 19 July 2016. Retrieved 11 November 2016.
  7. ^ "SEC.gov". United States Securities and Exchange Commission.
  8. ^ "stock exchange | Definition, Meaning, History, & Facts | Britannica". www.britannica.com. Retrieved 2022-03-13.
  9. ^ Barclay, Michael J. (2003). "Price Discovery and Trading After Hours" (Document). University of California, Berkeley.