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Trading stocks all day and all night might be an 'inevitability' for investors

The stock market's daily open and close 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 an around-the-clock exchange. There's interest in the idea from bigger players too: The New York Stock Exchange has reportedly polled market participants about interest in 24-hour access.

Several executives at companies that operate trading platforms told Yahoo Finance the shift from a traditional six-and-a-half-hour trading day to a never-ending one is becoming more likely — even if there are some concerns about volatility in late night sessions with low volume.

"It's a commercial inevitability," Interactive Brokers chief strategist Steve Sosnick told Yahoo Finance. "People all around the world are interested in the most active and highly tradable US instruments, and so it makes sense to offer them to a willing customer base."

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Interactive Brokers is one of several firms that has already increased its offerings, with an overnight trading session that spans from 8 p.m. ET to 3:50 a.m. ET, five days a week. Popular retail brokerage Robinhood (HOOD) has too, offering 24-hour trading five days a week. The exchange has seen over $10 billion in volumes in its overnight transactions since launching its 24-hour market a year ago, the company said during its most recent earnings release. And on its busiest days, about 25% of the platform's trading volume has come in nontraditional market hours.

"In five years, I'm thoroughly convinced this will be the norm, and we'll look back and say, 'I can't believe we ever weren't able to trade around the clock,'" Robinhood chief brokerage officer Steve Quirk told Yahoo Finance.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., May 16, 2024.  REUTERS/Brendan McDermid
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., May 16, 2024. REUTERS/Brendan McDermid (REUTERS / Reuters)

Like others in the industry who spoke to Yahoo Finance, Quirk noted that the new generation of investors, particularly those just coming into the market in their 20s, know few things that aren't accessible on their phone or laptop at all hours of the day. They don't expect trading to be any different.

And given the adaptation of trading online in the past several decades, Quirk argues there's no reason not to meet that ask. Add in that many of the companies in the US now earn a significant amount of their money internationally — therefore drawing interest from foreign investors — and demand for 24-hour trading is clearly there.

"At the moment, most of the exciting companies happen to be US listed," IG Group North America CEO JJ Kinahan told Yahoo Finance. "So people from around the world want to participate also; they may not want to put their full portfolio in the US, but they want to participate in what's going on in the US markets."

"And so I think as you start to see more brokerage firms expand around the world, you're going to see a demand coming from foreign countries that hasn't come in the past."

Kinahan did note that this could come with downside for investors, though, if liquidity isn't sufficient. Right now, there's a tight spread between the price investors ask to sell a stock at and where it's actually bought because volume is high.

"There's an opportunity that those markets aren't always as tight and busy," Kinahan said.

Demand for trading stocks outside of normal US market hours has already been growing.

CME Group — which offers global futures contracts tied to major indexes outside of normal market hours — has seen increased interest in nontraditional US hours trading. The average daily volume of trading on E-mini Nasdaq-100 futures in nontraditional US hours in 2024 is up about 24% from 2019, per CME Group's data.

CME Group's head of equities, Paul Woolman, reasons there's 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 pointed out that many key market-moving events come 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 hiking cycle, and news from the Middle East since the start of the Russia-Ukraine war in 2022.

Just this past week, about one-third of the daily gains in the Nasdaq 100 (^NDX) came before the traditional market open as investors digested an 8:30 a.m. ET release of inflation data.

"Clients want to be able to react to that news flow," Woolman said. "Historically, I think clients typically did try and hold on to their risk and would be waiting for six, eight, even 12 hours before they maybe traded again. I think clients learned they just can't afford to do 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 staffs and adapt to a new culture.

"I think it's going to take a little bit more time," Galinov said. "But what we see is that the overseas and retail [investors] and market makers will start driving the flow, and then I think over time naturally people will migrate to 24-hour trading with stocks the same way they do with currencies."

For US investors, the looming question remains how this could change the investing landscape.

"It doesn't actually really impact the average US investor," Sosnick at Interactive Brokers said.

It appears that nothing will change as long as the demand is there to provide liquidity in the market, which already happens in after-hours trading. There would just be more opportunities to buy or sell. And as always, investors don't have to press either button.

"Just because can someone can trade 24 hours a day does not imply that compels even the most active traders to be involved outside of US hours," Sosnick said.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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