Pursuant to FINRA Rule 2265, Morgan Stanley provides the following disclosure regarding the general risks of trading during the pre-market session or post-market session (the “extended hours”):
- Risk of Lower Liquidity: there may be lower liquidity in extended hours trading as compared to regular market hours and as a result, your order may only be partially executed, or not at all.
- Risk of Higher Volatility: there may be greater volatility in extended hours trading and as a result, your order may only be partially executed, or not at all, or you may receive an inferior price 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 of the next morning.
- Risk of Unlinked Markets: the prices displayed on a particular extended hours system may not reflect the prices in other concurrently operating extended hours trading systems dealing in the same securities and as a result you may receive an inferior price in one extended hours trading system than you would in another trading system.
- Risk of News Announcements: normally, issuers make news announcements that may affect the price of their securities after regular market hours. These announcements may occur during extended hours 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: 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 pre-market and post-market sessions, an investor who is unable to calculate implied values for certain Derivative Securities Products in those sessions may be at a disadvantage to market professionals.