Don't Worry About the Closing Bell. Today, It's Easier Than Ever to Trade Stocks Around the Clock

Trading U.S. stocks is relatively straightforward for East Coast residents, as markets open at 9:30 a.m. and close at 4 p.m., allowing ample daytime hours to make transactions. However, this schedule is less convenient for those on the West Coast, who have to wake up early for the market open, and it’s even more challenging for traders in Asia who want to participate in U.S. markets during local daylight hours.

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In recent years, the financial industry has seen a push to expand trading hours, with some aiming to enable 24-hour trading. Advances in technology have made this feasible, while the growing interconnectedness of global markets has increased the demand for continuous trading. The concept isn’t entirely new: U.S. futures markets already operate from Sunday evening to Friday afternoon, and cryptocurrency trades 24/7 with immediate processing. However, standard trading hours for U.S. stock exchanges have remained fixed since 1985, despite growing demand for more flexible options.

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Today, the major U.S. exchanges offer limited premarket and after-hours trading, and some have taken steps to broaden access. The New York Stock Exchange (NYSE), for instance, recently announced extended trading hours for its electronic Arca Exchange, which will now operate from 1:30 a.m. to 11:30 p.m. Eastern Time. This extension brings trading closer to 22 hours a day, up from the current 16 hours.

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Brokerages are also responding to demand by expanding trading hours. Charles Schwab Corp., for example, recently broadened its 24-hour trading offering to include all S&P 500 and Nasdaq 100 stocks, along with hundreds of exchange-traded funds (ETFs). Previously, Schwab’s 24-hour trading option was limited to a smaller selection of ETFs.

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The move towards round-the-clock trading has been bolstered by companies like Blue Ocean Technologies, which operates an alternative trading system (ATS) from 8 p.m. to 4 a.m. Eastern Time, making it the only firm offering overnight trading in this window. An ATS functions similarly to a stock exchange, allowing brokerages to partner with Blue Ocean to trade during these hours. Blue Ocean’s platform is used by over 50 brokerages, including Robinhood, Webull, and Futu Holdings.

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A key reason for brokerages expanding into 24-hour trading is to better serve international clients. Blue Ocean’s CEO, Brian Hyndman, noted that a significant portion of its business originates from the Asia-Pacific region, particularly from countries like South Korea, where demand for U.S. stocks has surged. Other markets such as Hong Kong, Tokyo, Singapore, and soon Australia have also shown increased interest in overnight trading on U.S. exchanges. For traders in Asia, Blue Ocean’s extended trading hours offer a valuable opportunity to access U.S. markets during their local business hours, helping meet demand that arises outside of standard U.S. trading times.

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As more traders engage in after-hours trading, overnight trading volumes are on the rise. Blue Ocean reports that 30 to 40 million shares are typically traded on its platform each night, while Interactive Brokers has seen a 469% increase in overnight trading activity this year. To accommodate this growth, Blue Ocean partnered with MEMX, a tech-savvy stock exchange, to provide advanced order-matching capabilities. This partnership significantly boosted Blue Ocean’s capacity, ensuring it can handle spikes in volume without disruptions. The need for this upgrade was highlighted in early August when unexpected market activity caused by a rise in the Japanese yen led to an influx of trading volume that temporarily crashed Blue Ocean’s platform. The technology upgrade completed soon after aims to prevent similar issues in the future.

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Global events that unfold outside of U.S. trading hours often drive increased activity on after-hours trading platforms. For example, international incidents like currency fluctuations or geopolitical conflicts can spur traders to take immediate action. When Japan’s yen surged unexpectedly in August, many traders rushed to Blue Ocean’s platform, overwhelming the system. Interactive Brokers also saw heightened trading activity in response to the yen carry trade unwinding, although its platform managed to withstand the increased volume.

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For brokerages that offer after-hours trading, reliability is crucial. Michael Wong, a sector director at Morningstar, explained that trading outages can impact a brokerage’s reputation. Occasional disruptions may be tolerated, but frequent outages could harm customer trust, especially for institutional clients who rely on uninterrupted access.

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Global interconnectivity means that events in one region can have ripple effects across markets, including U.S. exchanges. Traders have seen this happen in response to events like the Russia-Ukraine conflict and ongoing tensions in the Middle East, which can prompt market moves outside standard hours. Even domestic events, such as the U.S. presidential election, are likely to affect markets overnight. In particular, the uncertainty of vote counting can lead to volatility around the clock, especially as a clear winner might emerge at any time, including overnight or on a weekend.

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Past election nights have illustrated this phenomenon. For example, Ameritrade saw its busiest overnight futures trading during the 2016 election, with trading volumes surging as election results came in. While brokerages generally expect a spike in trading activity following an election, they also recognize the importance of preparing for unforeseen events that may drive overnight trading.

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In the view of Steve Sanders, an executive at Interactive Brokers, unpredictable global events present a bigger concern than anticipated high-volume nights. Unforeseen market shifts can bring a sudden wave of traders to after-hours platforms, testing the system’s limits. Sanders emphasized the importance of planning for such “black swan” events, which can occur without warning.

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As markets become increasingly interconnected, the demand for round-the-clock access to trading is likely to grow, with both U.S. and international traders seeking greater flexibility. Brokerages that can reliably support extended trading hours may gain an edge, catering to a global client base and providing a vital service in today’s ever-connected financial landscape.

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