The explosive growth of extended trading hours has created a wealth of opportunities for retail investors eager to trade across different regions. Now, exchanges are increasingly exploring their own extended-hours offerings to attract both retail and institutional traders with promises of more timely trading and enhanced profits in less liquid markets. OTC Markets is at the forefront of this movement, with an overnight trading launch slated for the end of June.
Overnight Transformation
After decades of relatively stable trading hours, stock-trading venues worldwide have seen rapid changes recently. The pandemic-era surge in remote-working day traders has prompted retail brokerages to extend their trading hours, catering to investors looking to trade across regions during their working day.
Last month, online investing platform Webull launched 24-hour trading, allowing users to trade US stocks and ETFs in key Asia-Pacific markets. It joins other brokers like Robinhood, Interactive Brokers, Charles Schwab, Futu, and FlexTrade in offering overnight trading.
This growing trend reflects the popularity of extended-hours trading with traders, making it increasingly indispensable to stock-trading platforms. For example, Robinhood’s overnight trading push has coincided with its return to profitability, with up to a quarter of total trading volume occurring outside traditional market hours.
A February partnership between Blue Ocean and DriveWealth, aimed at expanding overnight trading for Asia-Pacific investors, suggests that extended trading hours will become a standard feature for retail brokerages.
Brokerages are even introducing overnight trading into asset classes traditionally dominated by professional traders. In April, Interactive Brokers extended its trading day for US Treasuries from nine hours to 22, highlighting the competitive nature of retail brokerages in broadening their service offerings.
Reverse Osmosis
With crypto, major currencies, US Treasuries, many stocks, and leading stock-index futures already trading nearly around the clock, all-hours trading is becoming the norm across asset classes. The trickle-down effect from professional trading to retail investing highlights this shift, with retail interest in complex asset classes like options and sovereign bonds growing.
This broader movement has gained momentum as trading firms reconsider the benefits of off-hours trading. US stock exchanges are now exploring extended trading hours to attract both retail and institutional investors interested in real-time trading based on news developments in other regions.
In March, the upstart 24 Exchange submitted a revised application to the SEC to launch a round-the-clock US stock exchange, backed by Steve Cohen’s Point72 hedge fund, indicating buy-side interest in all-hours stock trading.
The New York Stock Exchange (NYSE) has also explored the merits of round-the-clock trading, polling market participants in April. While concerns exist about liquidity and trader quality of life, especially in Europe, there could still be significant demand for longer trading hours among professional traders.
Wealth of Opportunities
As exchanges extend their all-hours trading, one industry player is lighting the way forward. At OTC Markets, 83% of Q1 dollar volume traded was in international securities, making it an ideal venue to gauge demand for trading across regions outside normal trading hours.
OTC Markets announced it will launch overnight trading in late June. Broker-dealers can connect to its platform to provide customers access to the most active OTC equity securities from 8 pm to 4 am Sunday through Thursday via an SEC-registered alternative trading system with a fully electronic central limit order book.
This first-of-its-kind offering will give traders access to thousands of cross-traded global securities transacted in US dollars, including iconic brands like Adidas, Air Canada, BNP Paribas, Bombardier, Danone, Heineken, LVMH, Nestlé, Nintendo, Roche, and Tencent. Data providers can connect to OTC Markets’ comprehensive market-data offering featuring top-of-book and depth-of-book data.
Strong Prospects
The diversity of scenarios and market participants underscores the strong growth potential of OTC Overnight and extended-hours trading. Just as Blue Ocean has opened access to coveted US exchange-listed stocks for retail investors in Asia, OTC Overnight will offer Asia-based investors access to roughly 3,000 European securities and liquid US OTC names like the Ethereum Trust (ETHE) during regular trading hours.
US markets’ move to a T+1 settlement cycle could push more cross-region trading to OTC Markets’ platform, which trades in US dollars, circumventing narrower currency-conversion windows. OTC Overnight’s security set is restricted to DTCC-eligible securities that can clear and settle in the US to avoid international settlement issues.
Shortening the European trading day to bolster liquidity or improve work-life balance could further strengthen the case for overnight trading, allowing global investors to access European markets outside local trading hours.
Retail trading continues to thrive in buoyant stock markets, with off-exchange volume—a proxy for retail activity—hitting an all-time high of 51.6% last month, even as US stock markets reached new record highs. The anticipated global shift to central-bank rate cuts could further boost companies’ growth prospects through cheaper capital access.
These dynamics suggest extended-hours trading will continue to grow, transforming the market landscape into one that operates around the clock.
