In 1985, the last change in stock market hours took place, adjusting opening hours by one hour. Yet the NYSE's parent company, Intercontinental Exchange, Inc. deemed it necessary to adjust the stock market hours, in part because of the rise of markets that are or plan to be open 24/7. Electronic platforms at Robinhood and Interactive Brokers are already open five full days a week, while Coinbase even trades cryptos 24/7.

And it won't stop there. U.S. broker Charles Schwab is going to offer more stocks and ETFs outside regular trading hours, Webull recently expanded its 24-hour trading platform to attract U.S. users and Firstrade will start night trading next year.

This is all due to a growing demand for longer trading hours, especially from individual investors. Given the chart, this trend was already evident during pre- and post-market trading on the NYSE in recent years. And apparently that trend has continued, as evidenced by the substantiation from NYSE's Head of Markets, Kevin Tyrrell. Tyrrell stated that the extension is based both on ¨multiple interactions with market participants¨ and ¨our own data and analysis¨. One example is the survey they sent out to their users last April.

Session Volume as % of Total Single Stock Trading Volume

Source: nyse.com

In addition, the longer trading time offers benefits to international investors in other time zones. For example, Asian markets close earlier than U.S. markets, giving Asian investors the opportunity to trade simultaneously. With the S&P 500 expected to continue to rise, investors from around the world want to get a piece of the action.

Adding to this, investors are criticizing the fact that when world news or company results are released outside of trading hours, they cannot immediately act on their adjusted expectations. Examples include Nvidia's recent positive results or geopolitical developments, such as news of the Israel-Palestine conflict. According to Blue Ocean Technology, which facilitates off-hours sessions for U.S. brokers, there was a spike of $3.3 billion in trading volume the night after the U.S. presidential election, compared with an average volume of $1 billion.

At present, there are some clear drawbacks to after-hours trading. Despite a rise in recent years, trading volumes outside regular hours remain low. This results in reduced liquidity and increased price volatility. To mitigate these fluctuations, many brokers currently operate with limited orders, setting specific maximum and minimum prices. With the NYSE's new initiative, expectations are that trading volumes during extended hours will increase, leading to smaller price differences. Additionally, there is hope that the focus will shift away from just the opening and closing bells, keeping the market more active throughout the trading day.

However, this remains to be seen. Since in the rest of global markets the opening and closing times still have an influence, it is likely that the greatest activity will still be at the closing of the European/opening of the U.S. market. That daily rhythms continue to determine volatility can also be seen in the drop in volume at lunchtime. This will not change the extension by the NYSE right away.

source: Marketscreener.com

Future of 24/7 trading

Is the era of near-constant trading upon us? That's the question on everyone's lips. At present, only Blue Ocean Technology's electronic platform offers this tantalizing prospect, albeit with limitations. The fragility of this setup was exposed when Blue Ocean's servers went offline for hours during a global market downturn in August. Although the technical glitches have been ironed out, doubts linger. Can Blue Ocean handle the pressure if it decides to expand trading hours further? The financial world watches with bated breath. While New York is making a move toward 24-hour trading, European markets are actually thinking about introducing shorter trading days. Currently, they operate longer hours than their U.S. counterparts.

The New York Stock Exchange's decision to extend trading hours is a notable change, though it stops short of embracing 24/7 trading. The real question is whether other traditional exchanges will take a similar path. This move by the NYSE responds to increasing calls for longer trading hours, but it's uncertain if round-the-clock trading will become standard practice. The future hinges on technological advancements, investor preferences, and the potential benefits of these extended hours.

By Floris de Vries