After-hours trading is the name for buying and selling of securities when the major markets are closed.[2] 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).[3] 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 8:00AM ET.[4][5] After-hours trading on a day with a normal session occurs from 4:00 p.m. to 8:00 p.m. ET.[5]Market makers and specialists generally do not participate in after-hours trading, which can limit liquidity.[6]
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.[7] 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.[8]
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).[9]
