AFTER-HOURS TRADING
Since last summer, when electronic trading systems began staying open past the Nasdaq and New York Stock Exchange 4 pm closing bell, the always-on economy took a step closer to being always on. Off-hours volume, according to Dow Jones, soared 35 percent between November and February. Now a brokerage called CyBerCorp, acquired by Schwab in February, is making it even easier to moonlight as a daytrader.
The trouble with trading after the lights go out is that the national best bid and offer (NBBO) goes dark too. The NBBO, computed throughout the day by Nasdaq's SelectNet system, is a consolidated national market quote that gives market makers, daytraders, and small investors alike an accurate picture of price trends across all trading systems, including the 10 parallel electronic communication networks (ECNs). After the markets close, there's no way to see the best buy and sell prices in one place. Datek Online's customers, for instance, can see trade information from the Datek-owned Island ECN, but not from the bigger Instinet, a network owned by Reuters.
Responding to the after-hours boom, Nasdaq moved its closing time from 4 pm to 6:30 pm in late October 1999 and began updating the NBBO through the new closing time in February. Still, those who trade later - Island, for instance, operates until 8 pm - fly blind.
CyBerCorp's solution is a pair of Windows apps that search all Nasdaq trading networks (SelectNet and the ECNs) for the best price. With a CyBerCorp brokerage account ($10,000 initially, $5,000 minimum thereafter), you can download the full-featured CyBerTrader, for daytraders, or CyBerXchange, for retail investors. The software executes trades against the best price available and charges a per-trade fee ($14.95 to $19.95).
Austin, Texas-based CyBerCorp has focused on heavy-duty traders, but its aggressive initial investment and fee structure may appeal to retail customers. "The mission for 2000 is to grow on the retail side," says CyBerCorp communications manager Trey Robinson. The after-hours market, he adds, is a big draw. "As long as there's liquidity," Robinson says, "we'll be open to trade."
- Dan Brekke (brekke@well.com)
CyBerCorp:www.cybercorp.com.
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