The stock market's daily opening and closing prices could someday mean little if the idea gaining traction on Wall Street catches on.
24X National Exchange, a trading platform backed by hedge fund founder Steve Cohen, is seeking SEC approval to operate a 24-hour exchange. The idea has also attracted interest from major companies, with the New York Stock Exchange reportedly surveying market participants about their interest in 24-hour access.
Executives at companies that operate trading platforms told Yahoo Finance that although there are concerns about volatility in late-night trading, there is a potential shift from the traditional 6.5-hour trading day to endless trading. said that it is increasing. At a low volume.
“This is a commercial necessity,” Steve Sosnick, chief strategist at Interactive Brokers, told Yahoo Finance. “People around the world are interested in the most active and traded U.S. financial products, so it makes sense to offer them to a motivated customer base.”
Interactive Brokers is one of several companies that has already expanded its offering, with night trading sessions running from 8pm to 3:50am ET, five days a week. Popular retail brokerage Robinhood (HOOD) is similar, offering 24-hour trading, five days a week. The exchange's overnight trading volume has exceeded $10 billion since launching the 24-hour market a year ago, the company said in its latest earnings call. And on its busiest days, around 25% of the platform's trading volume takes place during non-traditional market hours.
“I'm absolutely confident that in five years, this will be the norm, and we'll all look back and say, 'I can't believe we didn't have 24-hour trading,'” said Steve, Robinhood's chief securities officer. Ta. Quirk told Yahoo Finance.
Like other industry insiders who spoke to Yahoo Finance, Quirk said the new generation of investors, especially those in their 20s who are just entering the market, don't have access to their phones or laptops at all times of the day. He pointed out that he knew very little about it. . They don't expect the deal to be any different.
And given the adaptation of online transactions over the past few decades, Quirk argues there is no reason not to meet that demand. Additionally, many U.S. companies now have significant international revenues and are therefore attracting interest from foreign investors, and there is clearly a demand for 24-hour trading.
“At this point, most of the exciting companies happen to be listed in the U.S.,” IG Group North America CEO JJ Kinahan told Yahoo Finance. “So people from all over the world also want to participate. They may not want to put their entire portfolio in the US, but they want to participate in what's happening in the US market. .”
“So as more brokerages start expanding around the world, I think we're going to start to see demand from abroad that we didn't have before.”
However, Kinahan noted that this could have a downside for investors if there is not enough liquidity. Currently, there is a narrow spread between the price at which investors are asking to sell a stock and the price at which it is actually purchased due to high volume.
“These markets may not necessarily be tight and crowded,” Kinahan said.
Demand to trade stocks outside of normal U.S. market hours is already growing.
CME Group, which offers global futures contracts tied to major indexes outside of normal market hours, sees growing interest in non-traditional time trading in the United States. The average daily trading volume of E-mini Nasdaq 100 futures after U.S. hours in 2024 will increase by about 24% compared to 2019, according to CME Group data.
Paul Woolman, head of equities at CME Group, recognizes that investors don't need to “wait until U.S. trading opens to manage risk,” adding to traditional after-hours trading interest. He explained that there is an educational aspect to the rise in education.
Uhlmann pointed out that many important market-moving events occur outside of market hours. This includes not only the usual corporate earnings releases, but also economic data that is closely watched amid the Fed's interest rate hike cycle and news from the Middle East since the start of the Russia-Ukraine war in 2022. .
Just last week, about a third of the Nasdaq 100's daily gain (^NDX) rose before the traditional market opened, as investors digested the release of inflation data at 8:30 a.m. ET.
“Clients want to be able to react to the news flow,” says Uhlman. “Historically, I think customers have typically waited six, eight, even 12 hours before trading again, trying to retain risk. I think I learned it.”
New entrants are attempting to enter the 24-hour market following signs of interest from investors. Cohen-backed trading platform 24X hopes to receive SEC approval for 24-hour trading this year.
However, 24X CEO and founder Dmitri Galinov told Yahoo Finance that large organizations need time to train staff and adapt to a new culture, so a complete transition to a 24-hour market is difficult. He said this will not happen overnight.
“I think it will take a little longer,” Galinov said. “But what we're seeing is overseas and retail [investors] I think market makers will start to drive the trend, and eventually people will naturally move to 24-hour trading in stocks, just like they do in currencies. ”
The pressing question remains how this could change the investment environment for US investors.
“The reality is it won't have a huge impact on the average U.S. investor,” said Sosnick of Interactive Brokers.
Nothing seems to change as long as there is demand to provide liquidity to the market, which is already the case with after-hours trading. There will only be more buying and selling opportunities. And as always, investors don't need to press either button.
“Just because someone can trade 24 hours a day does not mean forcing even the most active traders to engage outside of U.S. hours,” Sosnick said.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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