Is a 24-hour exchange a good idea?
A request to create a 24-hour exchange has been submitted to federal regulators despite long-standing concerns that longer hours could increase volatility.
Supporters of 24 Exchange claim that traders have become accustomed to trading around the clock with cryptocurrencies and want a similar experience with stocks. They say it could benefit foreign investors and non-professional traders from home.
The Securities and Exchange Commission, which is reviewing the request, must heed a concern raised by many professionals in the stock market: that the day will not end at a specific time, which could lead to burnout.
Still, 24 Exchange CEO Dmitry Galinov said traders should have the freedom to buy a stock whenever they want, especially if, for example, they read something about a stock during off-peak hours.
Q: Is a 24-hour exchange a good idea?
Phil Blair, Workforce
YES: But it should slowly evolve towards the potential of a 24 hour market. Added a few hours of operation at both ends of the day. Controls will need to be added on earnings announcements, mergers and other critical corporate financial condition reports so that the market is volatile during the day, not the middle of the night.
Gary London, London Moeder Advisors
NO: The system is not particularly bad, so I don’t see any compelling need to fix it. The motivation for change seems to come from people looking for early business benefits. I only see compulsive work habits that result from it, with no particular benefit. Everyone should have the opportunity to get a good night’s sleep.
Alan Gin, University of San Diego
NO: Having a trading day over gives people a break from the markets. People working in the securities industry have a chance to live outside the markets instead of having to be constantly available. Investors don’t have to be glued to financial news for fear of missing out on important developments. And as the episode with GameStop’s stock shows, people might be trying to manipulate the market, this time in the middle of the night.
Bob Rauch, RA Rauch & Associates
NO: I believe longer hours will increase volatility. There are times when Wall Street needs to shut down and assess if there is a computer glitch that has created volatile trading. Having seasoned professionals available during these potential times of crisis could prevent a meltdown. Plus, stock traders get up early. Let them have a drink at the end of the day and take the stress out of those of us in the hospitality industry.
James Hamilton, UC San Diego
NO: You might want to sell a stock at midnight in California, but is there anyone who wants to buy it then? A large number of sell orders in a tight market will cause prices to drop sharply. A 24 hour trade could lead to more price volatility with a larger role for fads and a smaller role for the fundamental value of stocks. Better to wait until the morning, when there will be more buyers.
Austin Neudecker, Weave Growth
YES: The stock market has many issues today (e.g. high frequency forward rush, overreactions to algorithmic trading), but fundamentally should be responsive to substantial information as it occurs. . Otherwise, trading in secondary markets after hours may overstate the impact of the news. In a global economy, trading only during business hours in the United States is just another holdover from the constraints of the past.
Kelly Cunningham, San Diego Institute for Economic Research
NO: In an ever-connected international global marketplace, it may seem ill-fated to limit stock trading to the Wall Street working hours window. Still, there should be time for the activity to reset. Timing is generally critical for trading, especially given the inherent volatility of the market. Decisions and actions outside of normal hours must be coordinated within a level playing field, otherwise unfair benefits may be easier to manipulate.
Chris Van Gorder, Scripps Health
NO: I don’t think there is much demand for trading stocks in the middle of the night, other than maybe those who like to trade stocks even. Since trading volume will be low and price volatility will be proportionately high, these are likely the type of “investors” that the proposed exchange hopes to attract. It sounds like a solution looking for a problem.
Norm Miller, University of San Diego
YES: It is inevitable that someone will successfully launch a 24 hour global scholarship. We already have commodities and 24/7 crypto trading, and most stock trading is done through automation anyway, not on the exchange floors. Some stocks are already listed on multiple exchanges and many transactions take place offline between large institutional players, so this is an inevitable market trend. We might want to impose blackout periods for publishing company information instead, so that insiders cannot benefit from announcements at unexpected times of the day.
Jamie Moraga, IntelliSolutions
NO: Investors want the best possible price; to do this, you need as much participation as possible, whether it’s buying or selling. Crypto trading has increased demand for the 24/7 exchanges, but it remains to be seen if this will be enough, as currently a small percentage of stock trading takes place for extended hours. Limited liquidity, increased volatility, reactive trading, lower demand, and more expensive transactions associated with the increased expense of running a 24-hour trade are also considerations.
David Ely, San Diego State University
NO: To be successful in creating a liquid market, a 24-hour exchange will need to attract an adequate number of traders outside of normal trading hours. It seems unlikely that the demand for overnight and weekend trading opportunities will be sufficient to meet this condition. However, qualified organizations looking to create a platform for 24-hour stock trading should receive regulatory approval to try.
Ray Major, SANDAG
YES: Historically, traders had to transact in person. But with the advent of modern computing, the Internet, and a global economy, we have 24-hour access to just about everything from shopping and entertainment to banking. Modernizing the stock market into a 24-hour economy only makes sense to allow investors to trade stocks around the clock in the same way they can trade cryptos around the clock.
Lynn Reaser, Point Loma Nazarene University
YES: With pre- and post-trade activity already available, the extension to 24 hours of trading is a logical move. This move would open the door to increased foreign participation. Wall Street is already monitoring night and weekend events and extended trading could be taken care of with limited staff. As with other types of economic activity, if there is no demand, activity will be limited. It should be tried at least on a limited basis.
Reginald Jones, Jacobs Center for Neighborhood Innovation
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