(For Pre-Market & Post-Market Trading Sessions)
Additional risks associated with trading in pre-market and post-market trading include:
Risk of Lower Liquidity. Liquidity refers to
the ability of market participants to buy and sell securities. Generally, the more
orders that are available in a market, the greater the liquidity. Liquidity is important
because with greater liquidity it is easier for investors to buy or sell securities,
and as a result, investors are more likely to pay or receive a competitive price
for securities purchased or sold. There may be lower liquidity in extended hours
trading as compared to regular market hours. As a result, orders may only be partially
executed, or not at all.
Risk of Higher Volatility. Volatility refers
to the changes in price that securities undergo when trading. Generally, the higher
the volatility of a security, the greater its price swings. There may be greater
volatility in extended hours trading than in regular market hours. As a result,
orders may only be partially executed, or not at all, or you may receive an inferior
price in extended hours trading than you would during regular market hours.
Risk of Changing Prices. The prices of securities
traded in extended hours trading may not reflect the prices either at the end of
regular market hours, or upon the opening the next morning. As a result, you may
receive an inferior price in extended hours trading than you would during regular
Risk of Unlinked Markets. Depending on the extended
hours trading system or the time of day, the prices displayed on a particular extended
hours trading system may not reflect the prices in other concurrently operating
extended hours trading systems dealing in the same securities. Accordingly, you
may receive an inferior price in one extended hours trading system than you would
in another extended hours trading system.
Risk of News Announcements. Normally, issuers
make news announcements that may affect the price of their securities after regular
market hours. Similarly, important financial information is frequently announced
outside of regular market hours. In extended hours trading, these announcements
may occur during trading, and if combined with lower liquidity and higher volatility,
may cause an exaggerated and unsustainable effect on the price of a security.
Risk of Wider Spreads. The spread refers to the
difference in price between what you can buy a security for and what you can sell
it for. Lower liquidity and higher volatility in extended hours trading may result
in wider than normal spreads for a particular security.
Risk of Lack of Calculation or Dissemination of Underlying
Index Value or Intraday Indicative Value (IIV). For certain derivative
securities products, an updated underlying index value or IIV may not be calculated
or publicly disseminated in extended trading hours. Since the underlying index value
and IIV are not calculated or widely disseminated during the extended trading hours,
an investor who is unable to calculated implied values for certain derivative securities
products in extended trading hours may be at a disadvantage to market professionals.