In a groundbreaking move for the U.S. financial landscape, regulators have granted approval for the 24X National Exchange, heralding the dawn of a nonstop stock trading platform. This innovative exchange is set to revolutionize how traders engage with the market by allowing them to exit risky positions outside traditional trading hours, a shift that could significantly enhance overnight liquidity for investors.
Dmitri Galinov, the visionary founder and CEO of 24 Exchange, characterized the approval from the U.S. Securities and Exchange Commission (SEC) as a “thrilling development.” He emphasized the exchange’s commitment to being customer-driven, with the flexibility to adapt swiftly to market demands and feedback. “With this historic SEC approval in place, we will build and operate a customer-driven Exchange that can rapidly align with market demands and adapt quickly to client feedback,” he stated.
The 24X National Exchange will roll out its operations in two phases. Initially, it will facilitate trading from 4 a.m. to 7 p.m. ET on weekdays, with a full launch planned for the second half of next year. The ultimate goal is to extend trading hours to 23 hours a day, starting Sunday at 8 p.m. and continuing until Friday at 7 p.m. Each trading day will include a one-hour operational pause for essential tests and system upgrades, ensuring a robust trading environment.
The motivation behind this initiative stems from a common pain point experienced by traders: the inability to respond to market dynamics during off-hours. Galinov pointed out that when significant events occur while markets are closed, traders are left vulnerable, unable to liquidate positions that could lead to substantial losses. The 24X National Exchange aims to alleviate this concern, particularly by tapping into trading volumes from the Asia-Pacific region, thereby enhancing liquidity for American equities during these non-traditional hours.
However, the approval of the 24X National Exchange has not been without its critics. Benjamin Schiffrin, director of securities policy at the market advocacy group Better Markets, raised alarms about the potential risks posed to retail investors. He cautioned that trading overnight could expose these investors to heightened volatility and a lack of market depth, leading to less favorable prices. “Retail investors trading during an overnight session will be trading in a market where there are few buyers and sellers, and where prices will be more volatile and less favorable than during normal hours,” Schiffrin warned.
Such concerns are underscored by research conducted by scholars from the University of Washington and Stanford University. Their findings suggest that expanded trading hours could actually diminish net gains for retail investors. They noted that during pre-market and post-market sessions, the market tends to be less liquid and more volatile, rendering prices less efficient. “Our research indicates that retail investors systematically underperform during these types of conditions,” they concluded, emphasizing that while the intention of the 24X Exchange may be to increase trading volume, many investors may still find themselves at a disadvantage.
Moreover, Schiffrin highlighted a psychological aspect of nighttime trading, pointing out that individuals often engage in riskier behaviors after dark. He drew parallels to the world of legalized sports betting, where easy access leads to impulsive gambling decisions, suggesting that financial trading could similarly exploit such vulnerabilities. The potential for predatory marketing tactics within the financial industry raises ethical questions about the balance between innovation and investor protection.
In an ever-evolving market landscape, the SEC’s approval of the 24X National Exchange coincides with other significant developments, including the New York Stock Exchange’s plans to extend trading hours at its Arca equities exchange to 22 hours per day. This trend underscores a broader shift toward accommodating a more globalized and round-the-clock trading environment.
As we look ahead, the introduction of the 24X National Exchange poses critical questions about market structure, investor behavior, and regulatory oversight. While the promise of greater flexibility and liquidity is enticing, it is crucial for investors—especially retail traders—to remain vigilant about the inherent risks associated with trading outside conventional hours. With the right strategies and awareness, traders can navigate this new landscape, but they must proceed with caution in an environment that could easily amplify the stakes.
