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Nasdaq is taking the race to offer 24-hour trading of US stocks, with the latest sign of importance that the biggest exchanges are obsessed with small but fast-growing corners of the market.
The US stock exchange, best known as home to many large technology companies, said Friday it plans to apply for a regulatory permit to extend the time until the night. The New York Stock Exchange and Chicago-based CBOE Global Market, the third largest player among US exchanges, Global Markets has already created similar applications.
Currently, US stocks are available for trading Eastern time between 4am and 8pm. Pre- and post-market sessions have already extended the day beyond the core hours between 9:30am and 4pm.
However, in recent years, online retail brokers such as Robinhood and interactive brokers have begun offering clients overnight deals. These businesses are supported by the Blue Ocean Trading Platform, and the business is currently being considered by larger rivals.
In an article posted on LinkedIn, NASDAQ President Tal Cohen gave several reasons for the decision, including the rise of retail trading and the growth of international holdings in US stocks. Both groups are more likely to want to trade outside normal US business hours.
“Entreating more investments to the market provides a compelling opportunity for both the US and the global economy,” Cohen writes. “Therefore, we are required to enhance access to people operating in different time zones.”
The NASDAQ boss warned that many problems need to be resolved before a 24-hour transaction becomes a reality.
Issues to address include the need to extend the operation of “tape” (recording transactions made in exchange) to cover the extra time. You also need to find a generally agreed way of dealing with what is called “corporate behavior.” For example, if a company assumes a price change move, such as shrinking or expanding its Shet account or announcing dividends.
Cohen acknowledged concerns between companies that will trade stocks.
“A recent NASDAQ survey of our listed companies shows that about half of respondents have reserved about increasing trading hours on exchanges, especially as it is linked to liquidity and corporate behavior,” he writes.
NYSE, owned by Intercontinental Exchange, filed an application last month in October when CBOE filed its application.
A plan to offer overnight trading by another group, a 24x exchange, or a 24x plan, was approved by the Securities and Exchange Commission in November. But that late-night ambition still relies on solving market-wide problems identified by the Nasdaq and others.
