How will extended hours affect trading?
NASDAQ won’t require all of its market makers to participate in late trading. The NYSE, by contrast, is leaning toward adopting the same practices as during its day session, which would require all specialists to handle all trades. The night sessions could create some interesting arbitrage plays for options traders if volatility increases after the sun goes down. But for small investors simply searching for a decent price for their 200 shares of IBM Corp., this volatility could do damage. ”Across the board, it’ll be a chaotic, less orderly market,” predicts one critic, Baruch College economist Robert Schwartz. Wall Street pros also note that after-hours traders often read breaking news the wrong way. For instance, when USA Networks Inc.(USAI) chief Barry Diller disclosed his bid for Lycos(LCOS), shares in the Internet-portal company jumped $10 after-hours on Instinet as investors cheered the prospect of a buyout. But Lycos Inc. declined more than $40 per share the next day on NASDAQ,
