Extended Hours Trading Disclosure
Wealthsimple Investments Inc. (“WSII”) is a registered investment dealer and member of the Canadian Investment Regulatory Organization (“CIRO”). WSII offers extended trading hours for U.S.-listed stocks and exchange-traded funds (“ETFs”). This disclosure is intended to be supplementary to our Best Execution and Order Handling Disclosure, and outlines some considerations you should be aware of when trading outside of regular trading hours.
Extended hours trading refers to the buying and selling of securities outside of regular trading hours (9:30 am - 4:00 pm Eastern Time, or “ET”). WSII clients can buy and sell U.S.-listed stocks and ETFs during pre-market trading hours (7:00 am-9:30 am ET) and post-market trading hours (4:00 pm-8:00 pm ET). Pre-market and post-market trading hours are collectively referred to as “extended hour sessions” for the remainder of this disclosure.
There may be early closure of stock markets on trading days before or after the holidays. Extended hours trading sessions will be adjusted in accordance to the shortened market hours.
Risks and Considerations for Extended Hours Trading
It is important to understand the risks and considerations associated with trading during the extended hours sessions:
Lower Liquidity
Liquidity refers to the ability of market participants to buy and sell stocks and ETFs. 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 stocks and ETFs, and as a result, investors are more likely to pay or receive a competitive price for stocks and ETFs purchased or sold. There may be lower liquidity in extended hours trading as compared to regular trading hours. As a result, your order may only be partially executed during the extended trading session, or not at all.
Higher Volatility
Volatility refers to the changes in price that stocks and ETFs undergo when trading. Generally, the higher the volatility of a stock or ETF, the greater its price moves over a short period of time. There may be greater volatility in extended hours trading than in regular trading hours. This can be especially true with ETFs. As a result, your order may only be partially executed, or not at all, or you may receive different execution prices when engaging in extended hours trading than you would during regular trading hours.
Changing Prices
The prices of stocks and ETFs traded in extended hours trading may not reflect the prices either at the end of regular trading hours, or upon the opening the next morning. As a result, you may receive a different execution price when engaging in extended hours trading than you would during regular trading hours.
Unlinked Markets
The prices displayed on the WS extended hours trading system may not reflect the prices in other concurrently operating extended hours trading systems dealing in the same securities. Accordingly, your order may get filled at the limit price even if the security trades at a better price in other extended hours trading systems.
Risk of News Announcements
Normally, companies (or issuers) make news announcements that may affect the price of their stock after regular trading hours. Similarly, important financial information is frequently announced outside of regular trading hours. These announcements may occur during extended hours trading, may cause an exaggerated and unsustainable effect on the price of a security if combined with lower liquidity and higher volatility.
Trading Halts
A trading halt may be imposed by a stock exchange or a regulatory body to allow a company to announce important news or when there is a significant order imbalance between buyers and sellers in a security. Pending orders for a security on halt may be canceled but won’t be processed until trading resumes.
Wider Spreads
The spread refers to the difference in price between what you can buy a stock or ETFs 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 stock or ETF.
Communication Delays or Failures
Delays or failures in communications due to a high volume of orders or technical issues may cause delays in or prevent the execution of your order. Any communication or computer problems experienced by WSII, its executing broker, or participating ECN or exchange, may prevent or delay the order from being executed/ canceled and/or fill reported back to the client. WSII reserves the right to temporarily or permanently close an extended-hours trading session without prior notification in the event of system failures or unforeseen emergencies. WSII will not be held liable for missed executions/cancellations or delay in reporting fill messages back to the client in the case of a system failure or cessation of extended-hours trading.
Duplicate Orders
There is a risk of duplicate orders if you place an order for the same security in both regular trading hours and extended hours sessions, even if that order is a day order. You may not receive confirmation of your executed orders from a trading session (regular/pre-market/post-market) until the next trading session has begun.
Extended Hours Trading through WSII
You should also be aware of the following considerations when submitting orders to trade in the extended hours sessions through WSII:
Platform support: We currently only offer extended hours trading through the Wealthsimple mobile app. Limited client support is available during extended hour sessions. While we have controls in place to monitor for any system errors, our team may not be readily available to assist if you encounter issues with specific orders.
Order Cancellation/ Rejection: WSII’s order management system is configured to automatically route the majority of client orders directly to WSII’s executing brokers for execution.
Client orders which meet or exceed WSII’s internal risk limits and/or orders canceled by WSII’s executing broker(s) during extended hours trading sessions will be canceled. You will receive an email notification if any order is canceled.
Order Routing: For information on order routing, please refer to the Best Execution and Order Handling Disclosure.
Opening and Closing Auctions: Client orders entered during extended-hour sessions may participate in opening and closing auctions.