The daily opening and closing of the stock market may one day have little meaning if an idea gaining traction on Wall Street becomes widespread.
24X National Exchange, a trading platform backed by hedge fund founder Steve Cohen, is seeking SEC approval to operate a 24-hour exchange. There is also interest in the idea from bigger players: The New York Stock Exchange has reportedly surveyed market participants about interest in 24-hour access.
Several executives at companies that operate trading platforms told Yahoo Finance that the shift from a traditional six-and-a-half-hour trading day to a never-ending trading day is becoming more likely — even if there are some concerns about volatility during late night sessions. with low volume.
“It’s a commercial inevitability,” Steve Sosnick, chief strategist at Interactive Brokers, told Yahoo Finance. “People around the world are interested in the most active and highly marketable American instruments, so it makes sense to offer them to a willing customer base.”
Interactive Brokers is one of several companies that has already expanded its offerings, with a nightly trading session that lasts from 8:00 PM ET to 3:50 AM ET, five days a week. Popular retail brokerage Robinhood (HOOD) has that too, offering 24-hour trading five days a week. The exchange has seen more than $10 billion in volume in its overnight trades since launching its 24-hour market a year ago, the company said during its most recent earnings release. And on the busiest days, about 25% of the platform’s trading volume came during non-traditional market hours.
“Five years from now, I am completely convinced that this will be the norm, and we will look back and say, ‘I can’t believe we never got to trade around the clock,’” said Robinhood Chief Brokerage Officer Steve. Quirk told Yahoo Finance.
Like others in the industry who spoke to Yahoo Finance, Quirk noted that the new generation of investors, especially those who don’t enter the market until their 20s, know few things that aren’t accessible at all hours of the day on their phones or Laptop. . They don’t expect business to be any different.
And given how online trading has adapted in recent decades, Quirk argues there’s no reason not to meet that demand. Add to that the fact that many of the US companies now make a significant portion of their money internationally – thus attracting the interest of foreign investors – and the demand for 24-hour trading is clearly there.
“Right now, most of the exciting companies are listed in the US,” JJ Kinahan, CEO of IG Group North America, told Yahoo Finance. “So people from all over the world want to participate as well; they may not want to put their entire portfolio in the US, but they do want to participate in what’s happening in the US markets.”
“And so I think as you see more brokerage firms expanding around the world, you’re going to see a demand coming from abroad that hasn’t come in the past.”
Kinahan noted that this could have disadvantages for investors if liquidity is not sufficient. Right now, there is a tight spread between the price at which investors want to sell a stock and the price at which it is actually bought because volume is high.
“There’s a chance that these markets aren’t always this tight and busy,” Kinahan said.
Demand for trading stocks outside normal US market hours has already grown.
CME Group – which offers global futures contracts tied to major indexes outside of normal market hours – has seen increased interest in non-traditional US hourly trading. Average daily trading volume on E-mini Nasdaq-100 futures in non-traditional U.S. hours in 2024 is up about 24% from 2019, according to CME Group data.
Paul Woolman, head of equities at CME Group, reasons that there is an educational aspect to the increased interest in trading outside of traditional hours, as investors realize they don’t have to wait for the US to open up to manage risks.
Woolman pointed out that many major market-moving events occur outside of market hours. This includes, as always, corporate earnings, but also economic data, which has been closely watched during the Federal Reserve’s rate hike cycle, and news from the Middle East since the start of the Russia-Ukraine war in 2022.
Just this past week, about a third of the daily gains in the Nasdaq 100 (^NDX) came before the opening of the traditional market, as investors digested inflation data at 8:30 a.m. (ET).
“Customers want to be able to respond to that news flow,” Woolman said. “Historically, I think clients have typically tried to lock in their risk and wait six, eight or even 12 hours before they might trade again. I think clients have learned that they just can’t afford that.”
With signs of interest from investors, new players are trying to enter the 24-hour market space. 24X, the Cohen-backed trading platform, hopes to gain SEC approval for a 24-hour exchange this year.
But Dmitri Galinov, CEO and founder of 24X, told Yahoo Finance that the full transition to a 24-hour market won’t happen overnight, as large institutions will need time to train their staff and adapt adapt to a new culture.
“I think it’s going to take a little more time,” Galinov said. “But what we see is that abroad and retail [investors] and market makers will start to drive the flow, and then I think over time people will naturally migrate to 24-hour trading with stocks in the same way they do with currencies.”
For American investors, the looming question remains how this could change the investment landscape.
“It really doesn’t have that much impact on the average American investor,” said Interactive Brokers’ Sosnick.
It seems that nothing will change as long as there is a demand for liquidity in the market, which is already happening in after-hours trading. There would simply be more opportunities to buy or sell. And as always, investors don’t have to press either button.
“Just because someone can trade 24 hours a day doesn’t mean that even the most active traders are forced to be involved outside of U.S. hours,” Sosnick said.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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