The FIX Trading Community has launched a working group for 24-hour, 5-day US equity trading as industry participants continue to push for continuous trading options.
Jim Kaye, FIX executive director, commented, “We’ve seen growing interest in 24-hour trading for some time, but we’re at a tipping point now. This is the right time to rally the industry to ensure we’re ready for the next stage of overnight trading.”
While exchanges and industry bodies are preparing for 24-hour trading, demand may be behind the supply. In September, market participants criticised the practice in an institutional capacity.
READ MORE: “Spectacularly stupid”: Buy side scorns 24-hour trading prospects
One argument for continuous trading is that it will be a boon for APAC investors, who would be able to access the US market during local trading hours. However, senior players in the region shared their concerns about the practice with Global Trading.
“Overnight trading is not really our thing… spreads are too wide and there’s no liquidity. To move into size we much prefer to trade during market hours to keep costs down for clients,” one said.
In the short term, another market participant conceded, there could be benefits. “As we push toward 24/7 trading, additional liquidity will bring greater price discovery, more liquidity providers and fairer pricing for all participants.”
However, they added, “Longer term there are liquidity concerns for minor exchanges struggling for relevance in the competition to attract investment to locally listed companies.”
FIX’s working group seeks to find solutions to these challenges, it states, as well as investigating how regulatory frameworks would apply outside of US trading hours and the best way to incorporate 24/7 capabilities into existing institutional workflows.
Many alternative trading systems (ATSs) already offer overnight US market trading, with FIX stating that overnight volumes currently represent 0.1% of total US market volumes. According to a DTCC and EY report published in December, this figure could reach 1-10% of total volumes by 2028. One such ATS, Blue Ocean, makes the same prediction.
READ MORE: Blue Ocean: Overnight trading could reach 10% of total volumes
Last year, NYSE, Cboe and Nasdaq all announced extended trading hour initiatives.
READ MORE: Cboe rivals NYSE with 24/5 trading plans
The Securities Information Processors (SIPs), which provide the US consolidated tape, and the Depository Trust & Clearing Corporation (DTCC) also launched service expansions.
READ MORE: 24-hour trading day ends at 8pm, SIPs say—Citadel issues warnings
Later in the year DTCC hired Arianne Collette as a managing director and head of US equities, continuing to build out its presence in the asset class.
READ MORE: DTCC intensifies US equities focus with new hire
Firms interested in taking part in the FIX working group are invited to contact the organisation.
