The financial world is witnessing a shift in trading hours, with major developments this year pushing markets closer to continuous operation. In May, CME Group transitioned its crypto futures and options to near-24/7 trading, with only a weekly maintenance break, mirroring the around-the-clock nature of the underlying crypto market. The demand for extended hours is evident, with CME reporting $1 billion in crypto futures/options volume over six weekends and a 44% year-on-year increase in H1 crypto derivatives average daily volume.
Regulatory support for extended-hours trading is growing, with the SEC approving changes to extend operating hours for US equity securities information processors. SEC Commissioner Hester Peirce highlighted these moves at a roundtable on preparations for 24-hour trading, noting they address issues of overnight market data and clearing infrastructure. However, the SEC has also raised concerns about thin order books, wider spreads, and increased price volatility during overnight trading, questions that remain unanswered.
Robinhood is at the forefront of this shift, planning to become the first US broker to offer Saturday trading for American stocks. The platform already provides 24-hour trading for selected stocks and ETFs, with overnight trading from 8 pm to 4 am ET. Robinhood's aggressive expansion reflects a broader trend, as retail investors increasingly drive demand for extended trading hours. August saw $335 billion in equity notional volume on Robinhood, up 68% year-on-year.
Despite the momentum, challenges remain. Overnight equity volumes are still low relative to regular sessions, and extended-hours trading remains less than 1% of total NMS stock trading. The transition to continuous trading is in its early stages, with different types of liquidity dominating at different times. The key competitive advantage may increasingly lie in knowing when and where liquidity is available, rather than simply having market access.