The Truth Behind 24/5 Trading: Understanding The Market Structure And How It's Done

Forbes

2 days ago

Harry Temkin is Chief Digital Officer at DriveWealth, a leading financial technology platform providing brokerage as a service.
This year has rolled out in explosive fashion for the stock market, with tariff wars, high inflation and technology realignment defining market trends and trading experiences.
Gone are the manual stockbroking days made famous by Michael Douglas in Wall Street and Eddie Murphy in Trading Places. Digital capabilities are driving innovation and change in the market, with broker-dealers no longer confined to the walls of the New York Stock Exchange.
One under-the-surface tactic that will change the way stocks are traded is 24-hour trading, with several exchanges and brokerage firms exploring and implementing extended trading hours.
While Blue Ocean was the first alternative trading system (ATS) to offer overnight equities trading, a whole host of new participants have announced their intent to enter the overnight trading arena, including NYSE Arca, Moon ATS and Nasdaq.
The concept of 24-hour trading is gaining traction as global connectivity and technological advancements drive demand for continuous access to financial markets.
The Case For 24-Hour Trading: Opportunities And Challenges
Traders and investors are coalescing around several emerging realities driving the need for expanded trading hours.
Worldwide traders are increasingly interested in U.S. stocks, and extended trading hours give investors from diverse locations the opportunity to trade U.S. stocks more easily and in their daylight hours. In Q1 2025, global demand and interest in pre-market trading (4-9:30 am EST) now accounts for over 55% of the shares traded during extended hours, according to NYSE.
Mobile trading technology has made it easier than ever for the masses to buy and sell stocks. On the educational front, financial literacy has created more knowledgeable investors, many of whom now want more access to 24-hour trading.
With the exponential growth of social media and news dissemination practically happening in real time, investors want to be able to react instantly to the ever-changing economic, political and corporate landscape impacting stocks.
Expanded 24/5 trading hours should open up the markets to an investor class that has historically not wanted to participate due to time-zone differences.
Concerns With 24/5 Trading
This drive in the market for expanded trading hours not only creates opportunities but also creates a number of potential risks that need to be addressed and incorporated into the current market infrastructure.
Government regulators, including the U.S. Securities and Exchange Commission, will need to continue to monitor the landscape and determine whether similar rules, such as Regulation NMS (Rule 611), should apply to overnight trading.
Securities with pending corporate actions are typically processed during the overnight hours, during which they are suspended from trading. With changes to the trading model, what will the new process be for handling these actions? At what time will corporate actions be processed, and how long will they take to process?
Major exchanges making the 24/5 shifts will have their hands full pairing their trading infrastructures with overnight trading hours. With the extra time added to the clock, exchanges will need to move promptly to clear trades, test security features and undertake trading system maintenance.
Understanding The Market From The Technological Evolution To Real-Time Reactions
While other asset classes like futures, foreign exchange and crypto have operated 24/7, equity markets were generally limited to six and a half hours per trading day. In that realm, there were clear distinctions between active and dormant periods. Digital trading advancements, such as artificial intelligence (AI) algorithms that process large amounts of stock market data instantly, are driving today's market decisions and the push for 24/5.
Simultaneously, social media (including TikTok, LinkedIn and X, among others) and internet connectivity have put a spotlight on stock market dynamics. Now, gathering the necessary trade information, using that data to vet a stock and making the trade is virtually instantaneous.
Additionally, geopolitical events such as global trade wars or Federal Reserve announcements that occur during U.S. overnight hours now trigger immediate and significant market trading responses, highlighting the interconnected nature of today's 24-hour trading landscape.
Necessary Infrastructure Changes For Effective 24-Hour Trading
Bringing 24/5 trading to life isn't just about keeping the lights on longer—it demands a complete reimagining of the market's foundation. To accommodate a 24/5 marketplace, stock exchanges and new entrants need to be more tightly connected so that data and liquidity are more easily accessible.
Otherwise, overnight markets will continue to be fragmented, creating wider spreads and challenges accessing liquidity and best executions.
Creating 24/5 global markets that work will require a rethinking of much more than exchange trading hours—it will also require rethinking how the entire global stock market operates in the digital era.
The Future Of 24-Hour Trading
Expanding stock market trading timelines isn't without risk. A recent Nasdaq report notes that half of its listed companies have reservations about expanding trading times, especially in areas such as liquidity and corporate actions. 'While overnight trading occurs today without the oversight, transparency and resilience that exchanges can bring, once exchanges choose to participate as trading venues, corporate issuers will expect a materially improved experience for their investors,' the report notes.
Consequently, while adding more venues will bring more liquidity and efficiency, this bifurcated structure presents challenges and requires proper infrastructure to be effective. The open outcry trading and hand signals depicted in Trading Places and Wall Street have been replaced by streamlined digital trading experiences on global exchanges.
That shift is now accelerating as major U.S.-based exchanges are expanding their trading hours to accommodate more foreign investors and a more democratized trading timeline structure.
Yet for 24-hour trading to become a reality, infrastructure improvements are needed, such as integrating exchanges, consolidating data feeds and linking liquidity across platforms.
As more regulated exchanges enter the market, market stability and confidence should improve, paving the way for more efficient and accessible 24-hour trading.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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