The New York Stock Exchange (NYSE) is gauging market sentiment on the potential introduction of round-the-clock stock trading, drawing inspiration from the thriving cryptocurrency markets. As the demand for 24/7 trading grows, the NYSE has launched a survey to assess the interest and concerns of market participants.

NYSE Explores 24/7 Stock Trading as Crypto Markets Thrive

The discussion surrounding 24/7 stock trading has gained momentum in recent years, fueled by the success of digital assets markets and the increasing participation of retail investors. While assets such as cryptocurrencies, US Treasurys, and leading stock index futures can already be traded around the clock, stock exchanges have traditionally adhered to limited trading hours.

However, the NYSE's survey indicates a growing interest in extending trading hours to accommodate investors' evolving needs. The survey, conducted by the NYSE's data analytics team, seeks to understand the level of support for 24/7 or 24-hour weekday trading and the necessary safeguards to protect traders from overnight price fluctuations.

Statistics show that people want to trade outside traditional session hours. For example, a report in March from Robinhood indicated that up to 25% of trading occurs outside traditional market hours. Investors have been able to trade around the clock from Sunday evening to Friday evening through Robinhood's 24 Hour Market service introduced last year, though these are only limit orders. The NYSE is considering introducing full trading and providing access to market orders.

Since we launched Robinhood 24 Hour Market last year, we’ve executed $10B in trading volume during overnight hours. On our busiest days, we’ve seen as much as 25% of the total daily trading volume come from outside of regular market hours.

— Vlad Tenev (@vladtenev) March 6, 2024

Challenges and Considerations

The transition to 24/7 stock trading presents several challenges that must be addressed. Managing liquidity in a round-the-clock trading environment has proven to be a complex task, even for established cryptocurrency platforms. The mismatch between the operating hours of traditional financial institutions and the needs of large traders and market makers can lead to sleepless nights for traders during periods of high volatility.

Moreover, the costs associated with implementing and maintaining a 24/7 trading infrastructure must be carefully considered. Clearing houses, which play a crucial role in settling trades, currently operate within set hours, and adjustments would be necessary to accommodate extended trading hours.

Many retail trading companies have begun offering their customers the option to trade during extended market hours of some sort. Last year, this included industry giants like the social trading platform eToro and the financial app Revolut.

Regulatory Approval and Market Reaction

As the NYSE explores the possibility of 24/7 trading, the startup firm 24X National Exchange is seeking approval from the Securities and Exchange Commission (SEC) to launch the first round-the-clock exchange in the country. The SEC has several months to review the proposed rule change, while other stakeholders have already examined the potential implications.

James Angel, a Georgetown University finance professor, believes the decision should be left to the market. "If it succeeds, we're all better off, and if it doesn't, well, the exchange's investors lost," he told Financial Times.

Although the NYSE has not yet disclosed the results of its poll, Tom Hearden, a senior trader at Skylands Capital, conducted his own survey. He asked his 19,300 followers on X if they would back a shift to 24/7 trading hours. Out of the 1,459 who responded, more than 70% opposed the idea.

Let’s do a (two hour) poll

Do you support the NYSE going to 24/7 trading?

— Tom Hearden (@followtheh) April 22, 2024

This does not change the fact that data from Spectrum Markets last year showed that one in three transactions occurred after conventional market hours.

Standard trading hours are continually expanding. However, the question is whether stock markets are ready to be available 24 hours a day?