The revitalized meme stock trade has quieted back down to a whisper as shares of GameStop (GME) sink. But if there’s anything to learn from this second round of meme mania it’s whether 24-hour, around-the-clock could ever be in the cards for the market (^DJI, ^IXIC, ^GSPC) and dedicated retail traders.
Yahoo Finance Markets Reporter Josh Schafer explains the kind of market access certain platforms provide, including Robinhood Markets’ (HOOD) 24/5 model, and what the pros and cons are for investors.
For more expert insight and the latest market action, click here to watch this full episode of Market Domination.
This post was written by Luke Carberry Mogan.
Video Transcript
As the meme trade finishes off a wild week of price swings during trading hours, stocks like Gamestop and a MC see big gains quickly, then to flip throughout the week.
But what if the traditional 6.5 hour trading day were to change?
Yahoo Finance is Josh Shaffer is joining us here with more.
So we’re talking 24 hours, 24 hour trading.
Yes, I’ve been asking a lot of folks in the space about that over the last month.
Now, since we had excuse me, that report from the Financial Times that the New York Stock Exchange polling its investors about what it would like to see from 24 hour trading and any general interest there.
The New York Stock Exchange has not actually made an announcement on moving to that or anything like that, but sort of just speculating on what it would look like.
Right?
And one of the exchanges that we track already does have some version of 24 hour trading.
So Robin Hood has what they call 24 5 trading, and so five days a week you can trade for 24 hours on Robinhood, getting back to the meme stock part of this earlier this week.
On Monday, they said 12% of their action on Gamestop came actually before the open.
So in that 24 hour session, and largely it seems like that’s what strategists and people that are in the exchange space think this would look like, anyway, if people are still going to trade during the day.
This is really a play for two different groups of people.
One would be international investors.
We have seen the companies specifically in the S and P 500 the big companies we talk about all the time.
A large portion of their revenue is now out of the US, and so people that live outside of the US want to invest in those companies.
The exchange has seen an opportunity to essentially appease that demand and be open during those hours.
The other flip side to this, too, is just You can do everything on your phone now for 24 hours, and there’s a younger generation of investors coming in right now, specifically the group in their twenties that has only grown up being able to do everything on their phone and again as an exchange which we should remember our businesses, right?
If there’s demand for someone to trade for 24 hours, the exchanges are going to want to meet them where the customer is.
And they feel like that younger generation of customer is on their phone all the time, and they want to be able to give them access to trading and for investors.
Josh, what would be the pros and cons of this?
Yeah, I mean the pros.
Josh, like I said, is just more access, I think from a a institutional standpoint.
Uh, the CME group had told me that they were looking at it from, like a risk perspective, right when you see the opportunity to be able to hedge risk before the market opens, what you’re looking at right now is daily volume in non US hours on the E mini NASDAQ 100.
That’s increased since 2019 and stayed relatively steady there.
That’s been an interesting development people as news happens overnight, being able to react to it, and then sort of the drawback would be what if there aren’t enough people in the market at 2 a.m. Eastern right?
And what does that do to liquidity.
It seemed like some of the strategists I talked to thought that that won’t be that big of an issue.
But I think a little bit remains to be seen because we haven’t really gotten there yet of if we open this all the way up and you can trade at 1 a.m. Eastern, what is it gonna look like?
The fear would be if there’s low volume, then there’s not gonna be the people that come in to buy the stock right when you look to sell it at a certain price right now that spread when you have high volume is pretty narrow.
That spread could widen significantly if you’re trading in low volume hours.
