The revitalized Meme stock trading has calmed down again. in a whisper like GameStop stock (GME) to sink. But if there's anything to learn from this second round of mememania, it's whether 24/7 could ever be in the cards for the market (^DJI, ^IXIC, ^GSPC) and dedicated retailers.
Yahoo Financial Markets Reporter Josh Schรคfer explains the type of market access certain platforms provide, including Robinhood Markets (HOOD) 24/5 model, and what are the pros and cons for investors.
For more expert insights and the latest market action, click here to watch this full episode of Market Domination.
This post was written by Lucas Carberry Mogan.
Video transcript
As meme trading puts an end to a wild week of price swings during trading hours, stocks like Gamestop and MC make big gains quickly and then turn around throughout the week.
But what would happen if the traditional 6.5-hour trading day changed?
Yahoo Finance is Josh Shaffer joining us here with more.
So we're talking about 24-hour, 24-hour operations.
Yeah, I've been asking a lot of people in the space about that over the last month.
Now, since we apologize, that Financial Times report that the New York Stock Exchange surveys its investors about what they would like to see in 24-hour trading and any general interest there.
The New York Stock Exchange hasn't actually made any announcements about the change to that or anything like that, but has simply speculated on what it would look like.
Good?
And one of the exchanges we track already has some version of 24-hour trading.
So, Robin Hood has what they call 24/5 trading, so five days a week you can trade for 24 hours on Robinhood, going back to the meme stock part of this earlier. This week.
On Monday, they said 12% of their action in Gamestop came before the open.
So in that 24-hour session, and it largely seems like that's what strategists and people who are in the trading space think it would be, anyway, if people are still going to day trade.
This is really a play for two different groups of people.
One of them would be international investors.
We've looked at the companies specifically in the S and P 500, the big companies that we talk about all the time.
A large portion of their revenue now comes from the US, so people who live outside 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 flip side of this as well is that you can now do everything on your phone for 24 hours, and there's a younger generation of investors coming in right now, specifically the twenty-something group that has just grown up being able to do everything on their phone and again as an exchange in which we should remember our businesses, right?
If there is demand for someone to trade for 24 hours, exchanges will want to meet them where the client is.
And they feel like that younger generation of customers is on their phone all the time and they want to be able to give them access to trading and investors.
Josh, what would be the pros and cons of this?
Yes, I mean the professionals.
Josh, like I said, it's just more access, I think from an institutional standpoint.
Uh, the CME group had told me that they were looking at it from a risk perspective, just when you see the opportunity to be able to hedge the risk before the market opens, what you are looking at right now is the daily volume in outside hours of the US on the E mini NASDAQ 100.
That has increased since 2019 and remained relatively stable there.
That's been an interesting development, since news happens overnight, being able to react to it, and then the downside would be what if there aren't enough people in the market at 2 a.m. Eastern, right? ?
And what effect does that have on liquidity?
It seemed like some of the strategists I spoke to thought that wouldn't be a big problem.
But I think there's still a little bit left to be seen because we're not there yet. If we open this up fully and can operate at 1am ET, what will it look like?
The fear would be that if there's low volume then there won't be people coming to buy the stock right when you're looking to sell it at a certain price right now, that spread when you have high volume is pretty tight.
That spread could widen significantly if you trade during low volume hours.
