An application to create a 24-hour stock exchange has been submitted to federal regulators despite long-held concerns that longer hours could increase volatility.
Backers of 24 Exchange say traders have become accustomed to round the clock trades with cryptocurrencies and want a similar experience with stocks. They say it could benefit overseas investors and nonprofessionals trading from home.
The Securities and Exchange Commission, which is reviewing the application, must consider a concern many professionals tied to the stock market have raised: That the day won’t end at a set time, possibly creating burnout.
Still, 24 Exchange CEO Dmitri Galinov said traders should have the freedom to buy a stock whenever they want, especially if they, for instance, read something about a stock during off hours.
Q: Is a 24-hour stock exchange a good idea?
Phil Blair, Manpower
YES: But it should evolve slowly to the potential of a 24-hour market. Adding a few hours of being open to both ends of the day. Controls will need to be added on corporate announcements of earnings, mergers, and other determinative financial status reports so that the market is volatile during the day and not in the middle of the night.
Gary London, London Moeder Advisors
NO: The system is not particularly broken, so I see no compelling need to fix it. The motivation for change seems to be coming from persons seeking early trading advantages. I only see compulsive working habits resulting, with no particular upside. Everyone should have a chance to get a good night’s rest.
Alan Gin, University of San Diego
NO: Having a finite trading day allows people to take a break from the markets. People working in the securities industry have a chance for a life outside of the markets instead of having to be constantly available. Investors don’t have to be glued to the financial news for fear of missing important developments. And as the episode with the stock of GameStop shows, people could try to manipulate the market, this time in the middle of the night.
Bob Rauch, R.A. Rauch & Associates
NO: I believe that longer hours will increase volatility. There are times when Wall Street has to stop activity and assess whether there is a computer problem that has created volatile trading. Having seasoned pros available during these potential times of crises could avert a meltdown. Further, stock traders are up early. Let them have a drink at the end of the day and avoid the stress that those of us in the hotel industry have.
James Hamilton, UC San Diego
NO: You may want to sell a stock at midnight in California, but is there somebody who wants to buy it at that time? A large number of sell orders in a thin market will bring a big drop in price. A 24-hour exchange could cause more price volatility with a bigger role for fads and a smaller role for the fundamental value of stocks. You’re better off waiting until morning when there will be more buyers.
Austin Neudecker, Weave Growth
YES: The stock market has many problems today (e.g. high frequency front-running, algorithmic trading overreactions) but fundamentally should be reactive to substantial information as it happens. Otherwise, trading in after hours secondary markets can exaggerate the impact of news. In a global economy, trading only during U.S. business hours is simply another vestige of past constraints.
Kelly Cunningham, San Diego Institute for Economic Research
NO: In an always connected, international global market, it may not seem to make much sense limiting stock trading to working hours window of Wall Street. Yet there should be time for activity to be reset. Timing is usually critical for trading, especially given the market’s inherent volatility. After-hours decisions and actions should be coordinated within an equitable playing field, otherwise unfair advantages may be easier to manipulate.
Chris Van Gorder, Scripps Health
NO: I don’t think there is much demand to trade stocks in the middle of the night, other than perhaps those who like to trade meme stocks. Given the trade volume will be light and price volatility will correspondingly be high, these are probably the type of “investors” the proposed exchange is hoping to attract. Seems like a solution in search of a problem.
Norm Miller, University of San Diego
YES: It is inevitable that someone will successfully launch a 24-hour global stock exchange. We already have commodities and crypto trading 24/7, and most stock trades occur via automation anyway, not on the floors of the exchanges. Some stocks are already listed on multiple exchanges and many trades occur off-line between large institutional players, and so this is an inevitable market trend. We may want instead to enforce company information release black-out periods, so that insiders cannot benefit from announcements at odd unexpected hours of the day.
Jamie Moraga, IntelliSolutions
NO: Investors want the best price possible; to do so you need as much participation as possible whether that is buying or selling. Crypto trading has increased demand for 24/7 stock exchanges, but it remains to be seen if that will be enough, as currently a small percentage of stock trading occurs during extended hours. Limited liquidity, increased volatility, reactive trading, lower demand, and costlier transactions coupled with the increased expense of running 24-hour trading are also considerations.
David Ely, San Diego State University
NO: To be successful in creating a liquid market, a 24-hour stock exchange will need to attract an adequate number of traders outside of normal trading hours. It seems unlikely that demand for trading opportunities at night and on weekends will be sufficient to achieve that condition. However, qualified organizations that seek to create a platform for 24-hour stock trading should be given approval by regulators to try.
Ray Major, SANDAG
YES: Historically, traders needed to transact business in person. But with the advent of modern computing, the Internet, and a global economy, we have 24-hour access to almost everything from shopping to entertainment to banking services. Modernizing the stock market in a 24-hour economy only makes sense, allowing investors to trade stocks around the clock the same way they can trade crypto around the clock.
Lynn Reaser, Point Loma Nazarene University
YES: With pre- and post-market activity already available, the extension to 24 hour-trading is a logical move. The move would open the door to increased foreign participation. Wall Street already monitors overnight and weekend events and extended trading could be accommodated with limited staffing. Just as with other types of economic activity, if there is no demand, then there will be limited activity. It should be tried at least on a limited basis.
Reginald Jones, Jacobs Center for Neighborhood Innovation
Not participating this week.
Have an idea for an EconoMeter question? Email me at phillip.molnar@sduniontribune.com.
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