Extended-hours trading

{{Short description|Stock trading outside of trading hours}}

{{Distinguish|Late trading|Aftermarket (finance)}}

{{Globalize|article|US|date=June 2020}}

{{Financial markets}}

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.{{cite web |title=Extended Trading |url=https://www.nasdaq.com/market-activity/quotes/extended-trading}}

After-hours trading is the name for buying and selling of securities when the major markets are closed.{{cite book|last1=Sulthan|first1=.A|title=Stock Market Dictionary|date=2017|publisher=Sulthan Academy|isbn=978-1522022862|pages=229|edition=1}} Since 1985, 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).{{cite web |url=https://www.nyse.com/about/history/timeline_1980_1999_index.html |title=About Us: History |publisher=NYSE |accessdate=2007-04-11 |archive-url=https://web.archive.org/web/20100618084759/http://www.nyse.com/about/history/timeline_1980_1999_index.html |archive-date=2010-06-18 |url-status=dead }} 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 8:00 a.m. ET.{{cite web|title=Pre-Market Trading|url=https://www.investorsunderground.com/pre-market-trading/|website=Investors Underground|date=19 July 2016 |accessdate=11 November 2016}}{{cite web |url=http://www.nasdaq.com/about/schedule.stm |title=Nasdaq Trading Schedule |publisher=NASDAQ |accessdate=2011-08-02}} After-hours trading on a day with a normal session occurs from 4:00 p.m. to 8:00 p.m. ET. Market makers and specialists generally do not participate in after-hours trading, which can limit liquidity.{{cite web|title=After Hours Trading|url=https://www.investorsunderground.com/after-hours-trading/|website=Investors Underground|date=19 July 2016 |accessdate=11 November 2016}}

Image:Screenshot-Google-Finance-AMZN-Extended-Hours-Trading.png

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.{{cite web|title=SEC.gov|url=https://www.sec.gov/investor/pubs/afterhours.htm|publisher=United States Securities and Exchange Commission}} 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.{{Cite web |title=stock exchange {{!}} Definition, Meaning, History, & Facts {{!}} Britannica |url=https://www.britannica.com/topic/stock-exchange-finance |access-date=2022-03-13 |website=www.britannica.com |language=en}}

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).{{Cite document |last = Barclay | first = Michael J. |title = Price Discovery and Trading After Hours |publisher = University of California, Berkeley |year=2003 }}