Forget Sleep. Who’s Ready to Trade All Night?

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Catherine Doherty is a finance reporter here at Bloomberg with a pretty specific beat.

I cover the plumbing of Wall Street.

She focuses on exchanges like the New York Stock Exchange and Nasdaq.

Really, what I am covering and reporting on is how the whole ecosystem works.

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 twenty four hours a day instead of from nine to thirty am until four pm Eastern. What went through your mind when you saw the New York Stock Exchange was even thinking about setting up the

Yeah?

When does a Bloomberg reporter ever sleep if the market's never closed? It's a good question, right, The answer is never, But concerns about her sleep schedule aside. Once she thought about it, Catherine 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.

The crypto market and other markets trade twenty four to seven, so it makes sense to at least ask the question of should we be doing this.

Today on the show Like It or Not? Twenty four 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. Bloomberg's Katherine Doherty says that the current trading hours for the New York Stock Exchange date back to over a century.

Ago, 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.

Even though today most trading is done electronically, the original trading hours have remained the same.

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 and that people like limits and they like rules and order, especially on Wall Street.

Are we really limiting hours just so so people who work on the Stock Exchange can have saner lives.

No, So think about if you're walking into a store, a grocery store in 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

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 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.

But Catherine, I've definitely bought after hours on robin Hood. They just told me they'd execute it in the morning. We don't get that fun confetti. Is that not twenty four hour trading?

So it is.

There are options robin Hood, Interactive Broker those are apps that if you are approved to trade after hours, You very much can, and that is because robin Hood, an 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. That trade will be handled through robin Hood,

Since it's twenty twenty one launch, Blue Ocean has seen the number of stock transactions taking place in the average night climb to forty million shares. That sounds like a lot until you compare it to the average twelve 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 as back to in Exchange that wants to get into twenty four

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 their 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

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 twenty four 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 twenty four to seven trading.

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.

Coming up after the break, the potential and potential peril of twenty four to seven 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 twenty four to seven trading, but Bloomberg's Catherine 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 forensince retail traders.

This change is a continuation of the momentum that we saw post COVID and post the memestock era. That was really when the definition of trading changed and the definition of a trader changed.

You could be at.

Home on your couch and you still can executing and buying shares of the biggest US firms. So the definition of how you trade who is a trader evolved and it's continuing to evolve to adapt to people's lifestyle.

But it's not just memestock investors looking to trade on the latest post in Wall Street Bets.

The American firms that have built out overnight trading have said the most demand that they are seeing is from overseas. This is in India, it's in Japan.

That makes sense because for them it isn't overnight exactly.

It's customers that want access to US stocks but don't want to wake themselves up in the middle of the night.

So those are the kinds of people who might want twenty four to seven trading. But there are just as many saying is this really a good idea? But for Wall Street traders, for example, what are the downsides of this kind of model? When do you sleep if the markets never close?

You know, I would say, oh, you wouldn't.

But a lot of these firms they have global reach, and so if you are working and living in the US and you need to provide a service overnight, you might be able to tap a colleague in Asia or in Europe before you have to wake up that day.

That depends on resources.

So for the firms that don't have that and aren't global, you might not be able to compete in the same way.

Since we usually see these huge trading volumes right after the opening bell and right before the four pm close. Could overnight trading actually smooth the mark it out?

I don't think right now the volumes that are shown overnight is enough to move the needle. It's not enough to smooth everything out. And there are still market malfunctions. There's technology that goes bad. Someone forgets to flip a switch. What's crazy is that as automated as things have become, and it's very automated, there's still times that there's manual errors. So I don't think that overnight trading is going to fix all problems and smooth everything out.

And what about regulators, how are they thinking about this? Are they freaking out?

I wouldn't say they're freaking out. In fact, I would say they're curious. So Gary Gensler, the chair of the SEC, has talked about the fact that there's an application in front of the SEC for an exchange that wants to register and offer overnight trading, and the way he talks about this is very diplomatic, and he just says, I am open for not only competition, but for innovation in the market. I want to support the market evolving.

All that is good, But.

Then he prefaces by saying they still need to abide by rules and regulation so that we prevent market manipulation and that we provide a He always talks about an equal playing field and a safe environment for investors, But the rules of the.

Road that work for a set trading day don't necessarily work around the clock. Just think of when companies usually report earnings before the opening bill or after markets close, and that's for a reason so as not to cause wild swings in their share prices while the markets are open. If markets are open long past four pm, when will companies drop bad news. It's just one of many questions this change raises. So, Catherine, what are the odds of this actually happening?

It is happening, that's not a question. The question is how does it evolve, and that will be determined by the big players getting behind it in a meaningful way.

What are the odds of the New York Stock Exchange adopting this model.

As of today, I would say it's unlikely. And that's just that's my read of the situation. That is Catherine Doherty's prediction, and only because very recently we had Lynn Martin on TV asked about twenty four to seven trading.

Let's head to thew York where Danny Berger is joined by the New York Stock Exchange President Lynn Martin to talk about why we all need.

Twenty four to seven trading in our lives.

Danny, Hi, Lisa, that's right, because you know, we want to be wrangling the kids and have the ability to trade while we do. Say Hyland, thank you so much for joining us, Thanks for having me. So some others might have opinions about this, but overall, the survey that you've gotten so far from what you've heard, I know you're still in the middle of it. What have you

And if she's saying that, it's not to say that they might not work on it, but that takes time, and her initial read seemed to be skeptical. So I don't think this is going to happen in a meaningful way with the New York Stock Exchange anytime soon.

If it ever did happen, would they have to retire the bell.

I don't think they're ever going to retire that bell. They love that bell because that bell is the it's a.

Symbol, it is it's their brand, and that brand is value. They have firms that will list on the New York Stock Exchange because they want their executive to get on the floor right as the market is opening and ring the bell.

So even if there's no closing, no opening, you think the bell will still be told. Yes.

I think it's a true marker of history, and I think again, people love consistency in finance.

This is the big take from Bloomberg News. I'm Sarah Holder. This episode was produced by David Fox. It was edited by Stacy Vanick Smith and Sam Potter. It was mixed by Veronica Rodriguez. It was fact by Audrian AA Tapia and Arafat Jalasho Perry. Our senior producers are Naomi Shaven and Kim Gettleson, who also edited this episode. Our senior editor is Elizabeth Ponso. Nicole Beamster bor is Our executive producer. Sage Bauman is Bloomberg's Head of Podcasts. Special thanks to