24/7 stock trading in the US coming soon? NYSE conducts survey with market participants

Wallstreetcn
2024.04.22 05:45
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NYSE is considering extending US stock trading hours to seven days a week, 24 hours a day, and is soliciting feedback from market participants. While some retail brokerages have started offering 24-hour trading services during weekdays, achieving exchange operations around the clock still faces challenges. 24X Company is seeking SEC approval to become the first exchange to operate 24 hours a day, but the SEC will review the plan over the next few months. Institutional investors have limited interest in overnight trading, mainly due to concerns such as poor liquidity and settlement risks. Operating around the clock may face issues such as employee scheduling arrangements

With cryptocurrency trading now available 24/7 and the increasing activity of retail investors in the US stock market, the concept of 24-hour stock trading has gained widespread attention in recent years.

Currently, only US Treasury bonds, major currencies, and stock index futures can be traded around the clock, while US stocks are only open from 9:30 to 16:00 Eastern Time Monday to Friday (as well as additional pre-market and after-hours trading sessions).

Reports indicate that the New York Stock Exchange is seeking feedback from market participants on whether to extend stock trading hours to seven days a week, 24 hours a day. Several retail brokerages such as Robinhood and Interactive Brokers have already started offering 24-hour trading services during weekdays, matching trades with Asian retail investors through internal inventory or dark pool trading venues.

The implementation of 24-hour exchange operations would be a significant change. Exchanges are heavily regulated by the US Securities and Exchange Commission (SEC) and require approval for stability, security, and rule changes. The transaction prices also form part of the official trading records, meaning that overnight trading may set the tone for normal trading hours.

A startup company named 24X is seeking SEC approval to become the first exchange to operate 24 hours a day, with its filing materials now in a second attempt. The SEC will review the plan in the coming months.

James Angel, a finance professor at Georgetown University, expressed support for this move:

How much trading volume they can generate in the middle of the night is not a concern for the SEC. Let the market decide.

However, there are many challenges to overcome in the transition of stock exchanges to operate around the clock. Institutions managing trading records have been discussing various issues related to 24-hour trading, including cost allocation. Additionally, clearing banks that ensure trade settlement only operate during specific hours.

Institutional investors have limited interest in overnight trading due to concerns such as poor liquidity and settlement risks. Currently, overnight services only allow retail investors to place "limit" orders, which expire if not executed at the specified price. A brokerage firm warned that even basic staff scheduling could be a tricky issue with 24/7 operations:

Operating around the clock is a different story. How would you respond if Apple's stock price spikes at 2 am or on a Saturday afternoon?

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