America’s Inaugural 24-Hour Stock Exchange Receives Operational Approval
The 24X National Exchange will allow investors to exit risky positions beyond official market timings, as stated by 24X National Exchange.
U.S. regulators have given the green light for a continuous stock exchange to kick off operations in the country, aiming to enhance overnight liquidity accessible to traders.
“24 Exchange revealed today that the U.S. Securities and Exchange Commission has granted approval for the operation of 24X National Exchange as the first national securities exchange in the U.S. permitting trading of U.S. securities for 23 hours each workday,” the company announced in a statement on Nov. 27.
The launch of the exchange will happen in two phases. Initially, it will function between 4 a.m. ET and 7 p.m. ET on weekdays starting in the latter part of the next year.
In the subsequent phase, trading will take place from 8 p.m. ET on Sunday until 7 p.m. ET on Friday. Each trading day will involve a one-hour operational pause for necessary tests and upgrades.
Dmitri Galinov, the CEO and founder of 24 Exchange, expressed his excitement about the SEC approval, calling it a groundbreaking development.
“With this notable SEC approval now in place, we will establish and manage an Exchange driven by customer needs that can quickly adjust to market demands and swiftly respond to client feedback,” he remarked.
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Galinov highlighted the vulnerability of traders when markets in their area are closed. Traders struggle to exit positions during unexpected major events. The 24X National Exchange aims to address this challenge by providing continuous trading, initially focusing on enhancing overnight liquidity for U.S. equities by leveraging trading volumes from the Asia Pacific region.
Several processes are still pending, including additional filings with the SEC, before the 24-hour trading can commence, the company confirmed.
Benjamin Schiffrin, the director of securities policy at Better Markets, a market advocacy group, disapproved of the SEC’s approval of 24X National Exchange, cautioning that it could harm investors and disrupt markets.
Permitting overnight trading exposes retail investors to new risks, he stressed. “Retail investors participating in overnight sessions will trade in a market with minimal buyer-seller activity, resulting in more volatile and less advantageous prices compared to regular trading hours.”
“Hence, retail investors will only receive unfavorable prices during overnight sessions in a challenging market, leading to losses if they had traded during normal business hours,” he explained.
Risky Behaviors
Schiffrin highlighted that individuals tend to engage in riskier behaviors at night.
Trading platforms may send notifications and prompts during nighttime when traders are more susceptible to influences, making it easy for people to trade with a simple tap of a button.
Using the example of legalized sports betting that entices people easily, potentially leading to a gambling addiction crisis, Schiffrin suggested that the financial industry could employ similar tactics to lure investors into trading with grave consequences.
They pointed out that liquidity tends to be low, volatility high, and prices less informationally efficient during pre-market and post-market sessions.
“Our study indicates that retail investors consistently underperform under these conditions,” they noted.
“While attracting more volume to these sessions is likely the objective of 24X Exchange, most trading activity will probably remain in the regular market session, leaving these concerns relevant for out-of-hours retail traders.”
The approval of 24X National Exchange coincides with NYSE’s plan to extend weekday trading hours at its Arca equities exchange to 22 hours per day, as announced in October.
With this update, weekday trading will operate between 1:30 a.m. and 11:30 p.m. ET. The fully electronic exchange will facilitate trading of all stocks, ETFs, and closed-end funds listed in the United States.
