Overnight trading: Why the US can, should and will move to this paradigm

Core Viewpoint - The transition to real-time overnight trading in US markets is seen as inevitable due to the potential benefits and opportunities it presents for market participants [3][12][14] Group 1: Current Developments - The US Securities Information Processor (SIP) faced challenges in approving proposals for overnight trading, highlighting the hurdles that need to be addressed before implementation [1] - In October 2024, the New York Stock Exchange announced plans to extend its trading hours to 22 hours, followed by similar proposals from Cboe and NASDAQ for 24-hour trading [1] Group 2: Market Potential - Brokerage accounts in the Asia-Pacific region hold over $3.4 trillion in U.S.-traded equities, indicating a significant market for real-time overnight trading [3] - Current overnight trading volume in US markets ranges between $900 million and $2 billion, with expectations of double-digit growth in the coming years [10] Group 3: Benefits of Overnight Trading - Enhanced liquidity from major exchanges will attract more institutional investors, leading to tighter bid-ask spreads and more efficient overnight markets [8][9] - The shift to overnight trading is expected to engage retail investors globally, further increasing market activity [9] Group 4: Technological and Regulatory Changes - Significant investments in technology and regulatory adaptations have been made to facilitate the evolution of electronic trading [5][6] - The industry is expected to embrace changes and innovations necessary for the successful implementation of overnight trading [7] Group 5: Societal Impact - Real-time overnight trading could unlock new wealth streams for global investors, particularly benefiting small investors in various regions [12][11] - The potential for embedded finance tools could enable everyday investors to participate in US markets seamlessly [13]