Late trading

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After-hours trading or late trading refers to stock trading outside the traditional trading hours of the major exchanges, such as the New York Stock Exchange and the Nasdaq Stock Market. Since 1985 the regular trading hours have been from 9:30 a.m. to 4:00 p.m. Eastern Time.^[1]

According to the Securities Exchange Commission, trading outside these regular hours is not a new phenomenon^[2], but it has generally been limited to high net-worth investors and institutional investors, such as mutual funds. The emergence of private trading systems, known as Electronic Communications Networks, or ECNs, has allowed individual investors to participate in after-hours trading.^[2]^[3]

In the mutual fund context, late trading involves placing orders for mutual fund shares after the close of the stock market (4:00 p.m for the New York Stock Exchange), but still getting that day's closing price, rather than the next day's opening price (the price of mutual funds is usually set only once per day, so intra-day prices are not applicable). In the United States this practice is illegal under SEC rules but many mutual fund managers appear to have allowed exceptions for certain hedge funds and other favored investors who were able to obtain that day's price, notwithstanding that their orders were received after-hours.