The daily opening and closing of the stock market may one day mean little if an idea that catches on 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. The idea is also attracting interest from big players: the New York Stock Exchange reportedly asked market participants about their interest in 24-hour access.
Several executives from companies that operate trading platforms told Yahoo Finance that a shift from a traditional six-and-a-half hour trading day to an endless day is becoming increasingly likely – although there are some concerns regarding the volatility of late night sessions. with low volume.
“It’s a trading inevitability,” Steve Sosnick, chief strategist at Interactive Brokers, told Yahoo Finance. “People around the world are interested in the most active and tradable American instruments, and so it makes sense to offer them to a willing customer base.”
Interactive Brokers is one of several firms that have already increased their offering, with an overnight trading session that runs from 8 p.m. ET to 3:50 a.m. ET, five days a week. Popular retail brokerage Robinhood (HOOD) also offers trading 24 hours a day, five days a week. The exchange has recorded day-to-day trading volumes of more than $10 billion since launching its 24-hour market a year ago, the company said in its latest earnings release. And on its busiest days, about 25% of the platform’s trading volume occurs during non-traditional market hours.
“In five years, I’m confident this will be the norm, and we’ll look back and say, ‘I can’t believe we were never able to trade 24 hours a day,'” said Steve, chief brokerage officer. from Robinhood. Quirk told Yahoo Finance.
Like others in the industry who spoke to Yahoo Finance, Quirk noted that the new generation of investors, particularly those entering the market in their 20s, know few things that aren’t accessible on their phone or their laptop at any time of the day. . They don’t expect trading to be any different.
And given the adaptation of online trading over the past few decades, Quirk says there’s no reason not to meet this demand. Add to that the fact that many U.S. companies now make a significant portion of their money internationally – thereby attracting the interest of foreign investors – and the demand for 24-hour trading is clearly there.
“At the moment, most of the interesting companies are listed in the United States,” JJ Kinahan, CEO of IG Group North America, told Yahoo Finance. “So people around the world also want to participate; they may not want to put their entire portfolio in the United States, but they want to participate in what’s happening in the American markets.”
“And so I think as more and more brokerage firms grow around the world, you’re going to see demand coming from foreign countries that hasn’t happened in the past.”
Kinahan noted, however, that this could lead to disadvantages for investors if liquidity is not sufficient. Currently, there is a narrow gap between the price at which investors ask to sell a stock and where it is actually purchased because volume is high.
“It’s possible that these markets won’t always be this tight and busy,” Kinahan said.
Demand for stock trading outside of normal market hours in the United States has already increased.
The CME Group – which offers global futures contracts linked to major indices outside of normal market hours – has seen increased interest in non-traditional trading hours in the United States. Average daily trading volume on E-mini Nasdaq-100 futures contracts during non-traditional hours in the United States in 2024 is up about 24% from 2019, according to CME Group data.
CME Group head of equities Paul Woolman says there is an educational aspect to the increased interest in trading outside of traditional hours, as investors realize they don’t need to ‘wait for the United States to open up to manage the risks’.
Woolman pointed out that many key events that influence the market occur outside of market hours. This includes, as always, corporate earnings releases, but also economic data, which is closely watched amid the Federal Reserve’s interest rate hike cycle, and news from the Middle East since war between Russia and Ukraine begins in 2022.
Last week, about a third of the Nasdaq 100’s (^NDX) daily gains came before the traditional market open, as investors digested the 8:30 a.m. ET release of inflation data.
“Customers want to be able to respond to this flow of information,” Woolman said. “Historically, I think clients typically tried to hold on to their risk and waited six, eight, even 12 hours before they could trade again. I think clients learned that they just couldn’t afford to do that .”
With signs of interest from investors, new players are trying to enter the 24-hour market. 24X, the Cohen-backed trading platform, is hoping to get SEC approval for a 24-hour exchange hours 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 s adapt to a new culture.
“I think it’s going to take a little longer,” Galinov said. “But what we’re seeing is that foreign investors, individuals and market makers will start to drive the flow, and I think over time people will naturally migrate to 24-hour trading of stocks the same way they do with currencies.”
For U.S. investors, the question remains how this could change the investment landscape.
“It doesn’t really have an impact on the average American investor,” said Sosnick of Interactive Brokers.
It appears that nothing will change as long as there is demand to provide liquidity in the market, which is already happening after hours. There would simply be more opportunities to buy or sell. And as always, investors don’t need to press any buttons.
“Just because someone can trade 24 hours a day doesn’t require even the most active traders to get involved outside of U.S. business hours,” Sosnick said.
Josh Schafer is a reporter for Yahoo Finance. Follow him on @_joshschafer.
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