NYSE Delays Extended Hours

The momentum building toward expanded trading hours on the exchanges lost steam Thursday as the New York Stock Exchange opted to delay extended hours for more than a year.

NYSE Chairman Richard Grasso said the board would first handle two other challenges: the Year 2000 computer bug and the planned shift to reporting stock prices in decimals rather than fractions.

As a result, investors aren't likely to see an evening session at the NYSE until the end of the second quarter of next year at the earliest.

The NYSE's policy-setting Board of Directors voted unanimously to delay expanded hours, Grasso said.

At some point next year, the exchange is likely begin trading in some 500 stocks during an evening session that would be followed eventually by a morning session to catch business from European markets players.

The NYSE's move follows the National Association of Securities Dealers, Nasdaq's parent, which approved a plan last week to open a late trading session that would run from 5:30 p.m. to 9 p.m or 10 p.m. Eastern time and that it would be limited to stocks in the Nasdaq 100.

Nasdaq set no time frame for the longer hours; some say evening trading could happen by the autumn, but the NYSE's decision to delay the onset of expanded trading means Nasdaq is more likely to wait.

The NYSE expects firms will begin crossing over to the decimal system by late January.

The NYSE board members had "come away" from their morning meeting with the belief that expanded hours trading shouldn't launch too quickly to shake the public's trust in the exchange, Grasso said.

A big fear on Wall Street is that the volatility of the less-liquid evening sessions would hurt individual investors the most. Grasso noted those concerns, saying the exchange had a "large challenge to educate" investors about the likely differences.

Opposition to expanded hours this year had been growing in New York. The exchanges are feeling pressure to move into the after-hours sessions from the fast-growing electronic trading platforms, which control some 17 percent of all trades, according to one estimate.

"Most of the institutions I have talked to suggest (expanded hours) is way too premature," Grasso told reporters.

Yet big brokerages such as Charles Schwab (SCH) and Merrill Lynch (MER) are said to be supportive of expanded hours, in some part to serve West Coast customers.

"Our members would prefer it that if they are going to have extended hours, that they take a look at the issues that are involved and put it off until next year," said Art Kearney, chair of the Securities Traders Association and director of equity trading at John G. Kinnard & Co. on Wednesday.

STA members, particularly the smaller firms, are worried over staffing evening sessions. Back offices across Wall Street are concerned about settlement issues involved with lengthening the day.

Grasso accelerated the push toward expanded hours trading a week ag when he floated the idea of evening trading hours "as soon as July."

In delaying the expanded hours, the NYSE is following advice from Securities and Exchange Commission Chairman Arthur Levitt, who related his concerns about expanded hours coming ahead of Y2K and decimalization in a speech over a month ago.

Trading sessions on the Nasdaq and NYSE currently run from 9:30 a.m. to 4 p.m. The New York Stock Exchange's hours have changed little in a century.