There's a growing push from retail traders, international investors, and a few big hedge funds to do something once unthinkable: keep stock markets open for 24 hours a day, 7 days a week. But when do traders sleep if Wall Street never shuts?
On today's Big Take podcast, Bloomberg finance reporter Katherine Doherty joins host Sarah Holder to break down what's behind the growing demand for after-hours trading on platforms like Robinhood, whether regulators will ever approve such a move, and what happens to the opening bell if the New York Stock Exchange never closes.
Here is a lightly edited transcript of the conversation:
Sarah Holder: Katherine Doherty is a finance reporter here at Bloomberg with a pretty… specific… beat.
Katherine Doherty: I cover the plumbing of Wall Street.
Holder: She focuses on exchanges, like the New York Stock Exchange and Nasdaq.
Doherty: Really what I am covering and reporting on is how the whole ecosystem works.
Holder: How the whole ecosystem works might be changing dramatically. In late April, the New York Stock Exchange polled market participants on how they felt about a radical idea: keeping the exchange open for trading 24 hours a day, instead of from 9:30 a.m. until 4 p.m. Eastern.
Holder: What went through your mind when you saw the New York Stock Exchange was even thinking about setting up the infrastructure for a 24-hour trading day?
Doherty: I think the first thought in my mind personally was, "Oh, does this extend into my protected weekends?"
Holder: Yeah. When does a Bloomberg reporter ever sleep if the markets never close? It's a good question.
Doherty: The answer is never.
Holder: But — concerns about her sleep schedule aside — once she thought about it, Katherine had to admit: the New York Stock Exchange had to at least start asking the question. Because like it or not — trading outside of the stock exchange's opening and closing bell has become a lot more common. For one thing, there's the always-on crypto market.
Doherty: The crypto market and other markets trade 24/7 so it makes sense to at least ask the question of should we be doing this?
Holder: Today on the show: like it or not, 24-hour trading in US stocks is taking off. But can the market plumbing support the growing demand to trade all day and all night? I'm Sarah Holder, and this is The Big Take from Bloomberg News.
Holder: Bloomberg's Katherine Doherty says that the current trading hours for the New York Stock Exchange date back to over a century ago.
Doherty: So it really stems back to the origination of the stock exchange when trades were placed in person. You had to actually go down to the floor and there were brokers that were running orders on physical pieces of paper to make sure that they got printed and that they would actually be executed.
Holder: Even though today most trading is done electronically, the original trading hours have remained the same.
Doherty: The hours have stayed because it gives a cleaner way for everyone to live their lives and buy and sell within parameters. It sets limits in that people like limits and they like rules and order, especially on Wall Street.
Holder: Are we really limiting hours just so people who work on the stock exchange can have saner lives?
Doherty: No. So think about if you're walking into a store, a grocery store and there and you're looking for fruit and there's hundreds of apples for you to choose from. You can be a little bit more choosy, get the best one that you think is the most appealing.
But if there's only two apples left and they're both rotten, that might be your only choice. So, that's how I like to think about it. The bigger the better. And by setting these limits, you're essentially forcing everyone to come together and to transact during these specific hours. So it's very intentional. It is efficient.
And it also creates better competition. So the more information, the more people that are expressing their value, that value is going to reflect the group as a whole. And the bigger that group is, the more accurate the price is going to be.
Holder: So, what about for people who want to trade but have their own day jobs? Or they wake up in the middle of the night, they're gripped by a desire to trade — can they trade?
Doherty: Now, they can, but they can't trade everything. And the way in which they trade is different than if they were trading during normal hours. So, when you are placing a trade, it isn't always going to go through immediately. Also, there are different pricing limits that are put in place.
Think about when in normal trading hours, prices fluctuate in milliseconds, and that's because there's transactions happening all the time. During overnight, there's less transactions, so the prices aren't going to be — the term is as "tight."
They're going to be wider. And that just means that there's less transactions going on. And so your price and what you are trying to buy a share at like a specific point, at a specific price is going to be a different experience than if you were buying during normal trading hours.
Holder: But Katherine, I've definitely bought after hours on Robinhood. They just told me they'd execute it in the morning. We don't get that fun confetti. Is that not 24-hour trading?
Doherty: So it is. There are options. Robinhood, Interactive Broker — those are apps that if you are approved to trade after hours you very much can. And that is because Robinhood and Interactive Broker have teamed up with another venue called Blue Ocean. And Blue Ocean is essentially the grocery store that stays open later than everyone else.
And so by partnering with them, they're able to give their customers the experience that you went through and that trade will be handled through Robinhood, but on Blue Ocean's venue. That's how we have evolved as a market to now offer the option to trade overnight.
Holder: Since its 2021 launch, Blue Ocean has seen the number of stock transactions taking place in the average night climb to 40 million shares. That sounds like a lot … until you compare it to the average 12 billion shares changing hands in the regular market.
But that number of overnight traders could rise as more industry players try to go nocturnal. Hedge fund billionaire Steve Cohen has backed an exchange that wants to get into 24-hour equities trading, too. The firm — aptly named 24 Exchange — is just waiting for SEC approval, and is expecting an answer this fall.
So what fundamentally has to change about how the stock market operates to make 24-hour trading possible?
Doherty: So those are the questions that even the industry itself is trying to answer. The New York Stock Exchange, they conducted a survey with some of their users to ask the question: Do you even want to trade overnight? So first they wanted to identify, is there demand?
Because in anything, if there isn't demand, no firm would want to put in resources and essentially build something that people don't want and aren't going to use. So that was the first question that they asked. And then, based on responses, they're going to make the decision as a business of whether they build the infrastructure.
Holder: The infrastructure. Right now, the need for trades to be centrally cleared — settled by a third-party firm acting as an intermediary between buyer and seller — is why 24-hour trading can only run for five days a week. But even if the middleman issue were sorted out — not everyone is jumping at the prospect of 24/7 trading.
Doherty: In general, people don't really love change on Wall Street. Because change means you have to adapt how things have been, change means you might have glitches. A lot of this is really advanced technology, so if there is going to be change, it means that you have to invest in the infrastructure to adapt.
Holder: Coming up after the break: the potential — and potential peril — of 24/7 trading. And … what to do with those iconic opening and closing bells if the market never closes?
So far, no major exchange has yet opened up 24/7 trading. But Bloomberg's Katherine Doherty says that a few changes in the past few years have made the prospect of always-on trading more appealing to some — if not all — market participants. Like for instance — retail traders.
