NYSE to consider 24/7 stock trading

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.

By Søren Nymark, Partner | The 6th of June 2024

It was recently reported in Financial Times that New York Stock Exchange is considering 24/7 stock trading pushing trading into normal off-hours, night and weekend trading.

On one hand side, other instruments as bonds and currencies are already trading 24/7 so why not stocks? One might argue that it would fit well with a global 24/7 online society. On the other hand, is there market interest for it? That is being investigated by NYSE currently.

Discussing the matter with colleague Peter Jørn Jensen, a range of items came up:

• Trading when convenient can increase market liquidity and efficiency. However, weekends will presumably mostly be a retail trading market thus characterized by lower trading volumes and thus larger price volatility. 24/7 would probably give more flexibility for e.g. European and Asian investors in other time zones.
• Increased opportunities for seeking price anomalies for high-frequency traders. Increased opportunities for brokers specialised in trading against retail investors.
• More pressure on operations (in a T+1 world) when breaking news is experienced late Friday evening with liquidity availability and settlement during the weekend. [how to handle cash and settlement when banks are closed during weekend? And will that lead to a mess of failed transactions Monday morning when banks and clearing houses open?
• 24/7 will increase costs – and who should bear the burden? The significant shift in operations processes during “normal” off-hours will require 24/7 operational handling and system availability.
• The less liquid broker pre-market and after-market trading offering will probably cease to exist?
• Regulatory interest; how will 24/7 affect matters as investor protection e.g. as price-volatility can be higher. Another challenge on the retail side is that other “casino”-like trading venues report significantly increased risk-taking during night trading.
• Will a positive decision spread to other stock exchanges making 24/7 a de facto market practice?

Exciting to see whether the consideration with end in a decision to proceed. And, then how to address some of the issues by market participants – investors, brokers, market infrastructures, regulators.