Major U.S. exchanges are moving toward 24/7 trading, a shift that could significantly alter the dynamics of market participation and price discovery. This transition aims to eliminate the perceived manipulation that occurs during after-hours trading, where brokers may exploit thin liquidity to influence prices and trigger stop-loss orders. With the NYSE, Nasdaq, CME, and Cboe all seeking to introduce continuous trading, the traditional power brokers could see their influence diminish as retail investors gain more direct access to market movements.
The implications for financial markets are substantial. Academic studies have highlighted that after-hours trading is less efficient, often leading to price distortions that can harm investors. By enabling round-the-clock trading, proponents argue that investors will be better positioned to respond to news in real time, rather than being sidelined during market closures. This could level the playing field, particularly benefiting retail traders who have historically been at a disadvantage during off-hours.
Ultimately, the shift to 24/7 trading could reshape the landscape of stock trading, reducing the power of intermediaries and enhancing price discovery for all participants. This change may lead to increased trading volumes and market efficiency, as traders can react immediately to events without the constraints of traditional trading hours.
Source: coindesk.com