Nasdaq’s near 24-hour trading plan sparks Wall Street backlash

Core Perspective - The proposal for near-24-hour trading raises concerns about market structure, particularly regarding liquidity and the potential for wider bid-ask spreads due to thinner order volumes [1][3]. Market Structure Concerns - There is a fear that extending trading hours may not attract new participants but rather dilute existing order pools, leading to increased volatility and opportunities for sophisticated traders to exploit slower retail orders [1]. - Wells Fargo analysts criticize the proposal, arguing that it could exacerbate existing issues of poor trading volumes and make equity trading resemble a casino [4][3]. Trading Hours Proposal - Nasdaq has filed a rule change to extend trading hours for U.S.-listed stocks to 23 hours a day, five days a week, with a single day session from 4 a.m. to 8 p.m. ET and a night session from 9 p.m. to 4 a.m. ET [5][6]. - The new trading schedule aims to accommodate overseas investors who wish to trade U.S. equities during their local business hours [10]. Global Market Trends - The shift towards extended trading hours aligns with global market trends, as younger traders have become accustomed to near-24/5 trading in crypto markets and some retail brokers [9]. - The Depository Trust & Clearing Corporation (DTCC) is moving towards 24/5 clearing, which supports the argument for extended trading hours by maximizing liquidity and reducing counterparty risk [11]. Industry Response - The New York Stock Exchange is also exploring extended trading hours, having received preliminary SEC approval for a model that would allow trading for 22 hours a day [12]. - The broader industry appears to be moving towards standardized extended hours, indicating a significant shift in market operations [13]. Future Outlook - There is speculation about the potential for U.S. stocks to trade 24/7 in the future, although current plans are limited to 23 hours a day to allow for necessary downtime [14]. - The direction of market operations is clearly leaning towards continuous trading, reflecting changing investor expectations and behaviors [14].