A New Era in Trading: America’s First 24-Hour Stock Exchange Approved
The Securities and Exchange Commission (SEC) has approved a landmark change in U.S. trading history by giving the green light to the nation’s first 24-hour stock exchange. Backed by Steve Cohen’s Point72 Ventures, 24 Exchange’s approval signals a major shift toward meeting the demands of modern retail investors for round-the-clock market access. The development not only promises to redefine traditional trading hours but also marks a turning point in the evolution of American financial markets.
What Is 24 Exchange and Why Is It Important?
24 Exchange, a startup specializing in continuous trading, was granted approval after its second application attempt. Unlike traditional stock exchanges, 24 Exchange aims to operate on a 24/5 basis, offering trading access from Sunday to Friday. This move aligns with global markets like cryptocurrency and foreign exchange trading, which already operate continuously.
Dmitri Galinov, the CEO and founder of 24 Exchange, highlighted the rationale behind this shift: “Traders are most at-risk when the market is closed in their geographic location. We will seek to alleviate this problem by facilitating around-the-clock U.S. equities trading.”
How the Exchange Will Operate
The implementation will roll out in two distinct phases:
- Initial Phase:
- Regular trading hours will commence initially, allowing the exchange to fine-tune operations and ensure seamless functionality.
- Full 24-Hour Trading:
- Overnight sessions will be added between Sunday and Friday, with a one-hour operational pause each day for software upgrades and routine maintenance.
This operational structure ensures both efficiency and reliability, addressing potential concerns over technological glitches in a continuous trading environment.
Industry Trends Toward Extended Trading Hours
The approval of 24 Exchange comes at a time when other major players in the financial world are embracing extended trading hours:
- Charles Schwab Corporation: Plans to offer 24-hour trading for all S&P 500 and Nasdaq-100 stocks by 2025.
- Robinhood Markets Inc.: Currently provides 24-hour trading for over 1,000 tickers.
- NYSE Parent Intercontinental Exchange Inc.: Filed to extend NYSE Arca trading hours to 22 hours daily.
These developments underscore a growing trend in the industry as companies seek to cater to the demands of modern investors who expect uninterrupted access to markets.
Implications for Retail Investors
The introduction of a 24-hour stock exchange addresses several key pain points for retail investors:
| Challenges Faced by Retail Investors | Solutions Offered by 24 Exchange |
| Market closure during critical global events | Continuous trading eliminates missed opportunities |
| Limited access to global equity trends | Round-the-clock trading enhances access |
| Higher volatility due to after-hours news | Increased market liquidity reduces risks |
With these solutions, retail investors can respond more effectively to breaking news and global market movements, leveling the playing field with institutional investors.
Addressing Risks and Challenges
Despite its advantages, 24-hour trading is not without its challenges. Critics point to the following potential risks:
- Liquidity Concerns: Extended hours could lead to thinner trading volumes in certain time zones.
- Technology Dependence: Continuous trading heightens reliance on robust technological systems, making cybersecurity a top priority.
- Investor Behavior: The constant availability of trading may encourage impulsive decision-making.
To mitigate these challenges, 24 Exchange has incorporated a daily operational pause for system upgrades and testing, ensuring reliability and minimizing technological risks.
Historical Context and Evolution
The move toward continuous trading is not entirely unprecedented. The cryptocurrency market has long operated on a 24/7 basis, and foreign exchange markets have provided around-the-clock access for decades. This transition in the equity market reflects the growing influence of these alternative trading systems on traditional financial structures.
Why Now?
The Catalyst for Change–
Several factors have converged to make this shift timely:
- Technological Advancements: Robust trading platforms and algorithmic trading have made continuous operations feasible.
- Changing Investor Demographics: Retail investors now make up a significant portion of market participants, with many seeking greater flexibility to trade.
- Post-Crypto Influence: Following the regulatory crackdown on cryptocurrencies, including the FTX collapse, trading platforms like 24 Exchange have shifted focus to equities, leveraging their expertise in continuous trading.
The Road Ahead
The approval of 24 Exchange represents just the beginning of what could be a broader transformation in the financial markets. If successful, this model could pave the way for:
- Increased Market Accessibility: Enabling investors across all time zones to participate seamlessly.
- Global Standardization: Bringing U.S. markets closer to the trading practices of other global exchanges.
- Innovative Products: Opening doors for new financial instruments designed for 24-hour trading.
The SEC’s approval of 24 Exchange marks a pivotal moment in the history of U.S. financial markets. By addressing the needs of a growing retail investor base and aligning with global trading standards, this development has the potential to reshape the way equities are traded. As the exchange prepares for its phased rollout, all eyes will be on its impact on market dynamics, investor behavior, and the broader financial ecosystem. With major players like Charles Schwab and Robinhood also expanding their trading hours, the era of 24-hour trading in the U.S. has well and truly arrived.
