There are nine ECNs, including New York-based Instinet Corp., The Island ECN Inc. and MarketXT Inc., which serve as private alternative stock markets for institutional investors and brokerages. Most ECNs take trades in the early morning for before-hours trading, until 8 p.m. Eastern time, and a few offer trades 24 hours a day. Despite avoiding the spread, which can range from 6 to 25 cents per share, the amount investors save by trading through ECNs can be minimal, because buyers and sellers still pay commission-based fees. Much of that news, say analysts, relates to earnings, partnerships and other material announcements from Silicon Valley technology firms traded on the Nasdaq Stock Market. The biggest disadvantage to after-hours trading is lack of volume.
Most institutional investors close up shop after the closing bell.
Analysts say that until the after-hours market attracts significant volume and meaningful price movements, the majority of investors will continue to make their trades during East Coast hours. Because of low trading volume or lack of liquidity, it takes much longer to find buyers and sellers in the after-hours market. The ECN market is fragmented. In the after-hours market, they are not. Bids outstanding on one ECN don't see each other because the aftermarkets are not connected.