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Nasdaq Wants to Run the After-Hours Trading Show

The National Association of Securities Dealers wants to take the leading role in unifying the after-hours market.

An alternative start to extended trading this summer could be eclipsed by


own plan.


National Association of Securities Dealers

, Nasdaq's parent, wants to take the leading role in after-hours trading, cooperating with the

New York Stock Exchange

, alternative trading systems and the

Securities and Exchange Commission

to create a unified after-hours market. The idea behind cooperation is to try to make after-hours trading much more like trading during regular hours, when there's plenty of liquidity and narrow spreads.

To do it right, it's going take a few months, said NASD Chairman Frank Zarb, as he called on members Thursday "to do the right thing" and wait for the Nasdaq before charging into an unsupervised after-hours session.

Right now, there's only one company with any firm after-hours trading plans:

Eclipse Trading

. The alternative trading system has signed on several market makers and two online brokerages, including

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to support its 6:30 p.m. to 8:30 p.m. ET session planned for mid-July.

And, it seems, Eclipse should be expecting a call from the NASD one day soon. So far the NASD hasn't spoken to Eclipse about holding off on its trading start, said Rick Ketchum, NASD president and chief operating officer. But the company will be included in the ''entire community'' that the NASD will be approaching, Zarb later said.

An Eclipse spokeswoman said company officials were on the West Coast and unavailable to comment.

Zarb and Ketchum's comments followed a NASD board of governors vote Thursday to develop an evening trading session from 5:30 p.m. to 9 p.m. or 10 p.m. The session would include Nasdaq market makers and existing electronic communication networks -- on a voluntary basis -- with Nasdaq's SelectNet system being used to connect the different players.

Trades made during the evening session would be identified as next-day trades for clearing purposes, and mutual funds are expected to use the closing data from the regular trading session for their fund calculations.

Getting all this together will take time, Zarb said, pulling out a temporary target to start in September. But he emphasized that Nasdaq is considering how to move in quickly if it's pressed to do so.

''If someone hot dogs in and goes first, then we'll have to respond,'' Zarb said.

SEC Chairman Arthur Levitt also put his two cents in on the matter, calling on the industry to put the interests of investors first. In a statement, he said he strongly supported ''investor choice in trading hours'' but that ''investor protection and market integrity issues need to be addressed.''

Broker-dealers should inform investors of the risks and benefits of trading outside regular market hours, including liquidity and volatility issues, he said.

And, he said the agency will work with the self-regulatory organizations, clearing organizations and vendors on related market issues such as pricing information, compliance and operational issues.

Levitt didn't mention waiting until after Jan. 1, 2000, to start extended trading, as he has in the past.