After NYSE’s 22-hour market expansion last year, Cboe Global Markets is going one step further – offering 24-hour trading for stocks listed on the US EDGX Equities Exchange (EDGX).
In October last year, NYSE extended its trading hours to 22 hours – from 1:30 AM to 11:30 PM ET – five days a week. At the time, Kevin Tyrrell, head of markets, said: “As the steward of the US capital markets, the NYSE is pleased to lead the way in enabling exchange-based trading for our US-listed companies and funds to investors in time zones across the globe.”
According to the US Department of the Treasury, foreign investors’ US equity holdings rose by 124% to US$13.7 trillion between 2016 and 2023. At Cboe, between 2022 and 2024 EDGX’s early hours trading sessions, from 4:00AM ET to 7:00AM ET, saw average daily volumes rise by 135%.
Demand for 24-hour trading is domestic, too. The increased presence of retail investors in the market, and the rising power of the brokers servicing them, are pushing traditional exchanges to consider an all-night approach. According to Dmitri Galinov, CEO of 24X National Exchange, as of September 2024, Robinhood was conducting a quarter of trades outside of standard hours.
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The global shift towards end-of-day trading is also an incentive, with some market participants believing that removing the market close would eliminate the issue of concentrated liquidity and volatility. However, others warn that it could string out liquidity and diminish trust in the market.
Sylvain Thieullent, CEO of electronic trading firm Horizon Trading Solutions, commented: “Liquidity is likely to be thinner outside of regular trading hours, which can make it difficult for high-speed traders to execute trades at desired prices. Realistically, it is sophisticated algorithms that are able to analyse extensive volumes of data, detecting patterns, and executing trades with split-second precision that will determine who is able to capitalise most from this trend among global exchanges.”
For any exchange planning to offer 24-hour trading, though, current market infrastructure is a considerable barrier. The SEC requires that exchanges report trades and quotes to Securities Information Processors (SIPs) in real-time. As such, exchanges can only run when SIPs are operating – between 4:00 AM and 8:00 PM ET. This cuts out a large chunk of the Japan daytime market.
In order for Cboe’s 24/5 plans to be approved, substantial changes will need to be made. Aside from SIP hours, regulatory amendments already in motion around minimum tick sizes and access fee caps, new definitions of round lot sizes and the addition of odd lot quotations to SIPs mean that round-the-clock trading will not be in place anytime soon.
READ MORE: Exchanges weigh impact of lower fee caps, transparency
To facilitate real-time pricing in a 24/5 trading environment for APAC and Europe market participants, Cboe intends to increase market data distribution across the regions. An expansion of trading hours will also improve the range of data available through the Cboe One US Equities Feed, it added, which provides consolidated, real-time market data from the group’s four US equities exchanges.
Currently, trading is available on EDGX from 4:00AM ET to 8:00PM ET. Early order acceptance begins at 2:30AM ET. The exchange already provides close-to 24×5 trading for its S&P 500 Index (SPX) options and volatility index (VIX) options and futures markets, the models for which will be used as the format for the equities market.
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