For decades, US equity exchanges have hit the pause button every night, leaving markets shut for several hours. Come December, the lights will stay on much longer as the stock market shifts toward around-the-clock trading.
Nasdaq, NYSE Arca, 24X National Exchange and Cboe EDGX have crafted plans to add an overnight session from 9 p.m. to 4 a.m. in New York, on top of the regular hours and existing pre- and post-market periods they already operate. The expansion, set to take place on Dec. 6, seeks to capture growing demand from foreign investors while competing with crypto and prediction markets, which have upended traditional expectations of Wall Street's operating hours.Overnight trading has existed for years, primarily through alternative trading systems, but it's made up a tiny slice of the total activity — around 1% of equity trading volume in the second quarter, data presented at a Securities and Exchange Commission roundtable last week show. But while tiny next to daytime trading by any account, overnight trading is growing quickly, surging 358% from a year ago.The anticipated implementation of 23/5 trading has sparked a debate about what longer hours would mean for market participants worldwide. Proponents say the expansion will remove time-zone barriers and give foreign traders better access to US markets. Skeptics see lower liquidity and wider bid-ask spreads as amplifying trading risks.Institutional investors are mainly worried “about the market quality during the extended hours,” said David Easthope, a senior analyst at Crisil Coalition Greenwich, while concerns about operations and staffing are not necessarily at the top of their list.
Source:MoneyControl
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