The daily opening and closing of the stock market could one day have little meaning if an idea gaining traction on Wall Street spreads.
24X National Exchange, a trading platform backed by hedge fund founder Steve Cohen, is seeking SEC approval to operate a center 24 hours a day. There is also interest in the idea from large players: the New York Stock Exchange reportedly asked market participants about their 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 an endless day is becoming more likely. even though there are some concerns about volatility in overnight sessions with low volume.
“It’s a trading inevitability,” Interactive Brokers chief strategist Steve Sosnick told Yahoo Finance. “People around the world are interested in the most active and highly tradable North American instruments, and so it makes sense to offer them to a willing customer base.”
Interactive Brokers is one of several companies that has already increased its offerings, with an evening trading session that runs from 8pm ET to 3:50am ET, five days a week. Popular retail brokerage Robinhood (HOOD) has done so too, offering 24/5 trading. The exchange has recorded more than $10 billion in volumes in its overnight trades since launching its 24-hour market a year ago, the company said during its most recent earnings call. And on the busiest days, around 25% of the platform’s trading volume arrived at non-traditional market times.
“In five years, I’m completely convinced that 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, director of brokerage at Robinhood. Quirk told Yahoo Finance.
Like other industry professionals who spoke with Yahoo Finance, Quirk noted that the new generation of investors, especially those entering the market in their 20s, know little that isn’t accessible on their phones or laptops at any time of the day. day. . They don’t expect negotiations to be any different.
And given how online commerce has adapted in recent decades, Quirk argues there’s no reason not to meet that request. Add to that that many companies in the US now make a significant amount 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 interesting companies are listed in the US,” 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 U.S., but they want to participate in what’s happening in the U.S. markets.”
“And so I think as you start to see more brokerages expanding around the world, you will see demand coming from foreign countries that hasn’t happened in the past.”
Kinahan noted that this could be disadvantageous for investors if liquidity is not sufficient. Right now, there is a narrow gap between what investors ask to sell a stock at and where it is actually bought because volume is high.
“There is an opportunity that these markets are not always so tight and busy,” Kinahan said.
Demand for stock trading outside of regular U.S. market hours is already growing.
CME Group – which offers global futures contracts linked to major indices outside of regular market hours – has seen growing interest in non-traditional trading during US hours. Average daily trading volume for E-mini Nasdaq-100 futures at non-traditional U.S. times in 2024 is up about 24% from 2019, according to data from CME Group.
CME Group head of equities Paul Woolman argues there is an educational aspect to the increased interest around trading outside of traditional hours, as investors are realizing they don’t need to “wait until the US opens to manage risk ”.
Woolman highlighted that many important market-moving events happen outside market hours. This includes, as always, corporate earnings releases, but also economic data, which is closely watched in the midst of the Federal Reserve’s interest rate hike cycle, and news from the Middle East since the start of the Russia-Ukraine war in 2022 .
Last week, about a third of the daily gains in the Nasdaq 100 (^NDX) came before the traditional market open, as investors digested an inflation data release at 8:30 a.m. ET.
“Customers want to be able to react to that news flow,” Woolman said. “Historically, I think clients would typically try to hold on to the risk and wait six, eight or even 12 hours before trading again. I think clients have learned that they just can’t afford to do that.”
With signs of investor interest, new players are trying to enter the 24-hour market. 24X, the trading platform backed by Cohen, hopes to win SEC approval for a 24-hour exchange this year.
But Dmitri Galinov, CEO and founder of 24X, told Yahoo Finance that the complete transition to a 24-hour market won’t happen overnight, as large institutions will need time to train their employees and adapt. to a new culture.
“I think it will take a little longer,” Galinov said. “But what we see is that abroad and retail [investors] and the market makers will start to drive the flow, and then I think over time, naturally, people will move to 24/7 trading with stocks the same way they do with currencies.”
For North American investors, the question remains how this might change the investment landscape.
“It actually doesn’t really affect the average U.S. investor,” said Interactive Brokers’ Sosnick.
It seems that nothing will change as long as there is demand to provide liquidity in the market, which is already happening in after-hours trading. There would just 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 mean it forces even the most active traders to get 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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