After-hours trading, once the exclusive domain of American investors and large institutions, is now available for Canadians who want to buy or sell a wide range of U.S.-listed stocks after the regular stock markets have closed.
TD Waterhouse announced Friday it will offer after-hours trading for its Canadian retail clients. It's the first Canadian discount broker to offer after-hours access for both Nasdaq and NYSE-listed stocks.
Clients will be able to buy or sell most stocks listed on the Nasdaq, as well as some listed securities, between 4:30 p.m. and 7 p.m. eastern time, Monday to Friday.
TD Waterhouse will offer the service through its relationship with REDIBook. REDIBook is an electronic communications network (ECN) that has similar arrangements with a number of U.S. brokerage houses. TD Waterhouse has offered after-hours trading to its American clients since November.
In a release, John See, vice-chair of TD Waterhouse Group, said "Our customers on both sides of the border want the opportunity to place trades after markets are closed, when earnings reports, major news and financial stories are typically released."
ECN's are not like traditional stock markets. Orders are processed through a system that automatically matches buy and sell orders. And unlike regular market makers, ECN's have no responsibility to ensure liquidity in the marketplace. If there are no buyers, you won't be able to sell.
TD Waterhouse says after-hours orders have other limitations. Orders placed during normal trading hours cannot carry over to the after-hours markets. And orders that are not filled by the end of the after-hours session will expire. They won't carry over to the next trading day.
Clients will also not be able to enter trades through TD Waterhouse's Web site. They will have to phone an investment representative, who will then enter the order in the REDIBook system.
Royal Bank's Action Direct discount brokerage has offered after-hours trading for Nasdaq securities since December. A spokesperson for the Bank of Montreal said its discount brokerage operation, Investorline, will offer after-hours trading access "shortly". E*Trade Canada says it plans to offer after-hours trading for its Canadian clients "in the next quarter". Charles Schwab Canada expects to offer after-hours trading in U.S.-listed securities in the spring.
The only other way to trade after hours is through the TSE's "last sale trading session" that began in November 1999.
This system, which any Canadian investment dealer can access, allows investors to enter a buy or sell order between 4:05 p.m. and 5 p.m. ET. But it must be matched and can only be executed at the official closing price for the stock at the end of the regular trading session (4 p.m.), and only applies to TSE-listed securities..