(Bloomberg) -- A startup stock exchange aiming to handle trades around the clock won a US watchdog’s approval to operate a venue 23 hours daily, five days a week.
24X National Exchange, which counts Steve Cohen’s Point72 Ventures fund as a backer, secured permission to start offering sessions that span the US daytime and later add overnight trading, the Securities and Exchange Commission wrote in a notice posted Wednesday. The plan would preserve one-hour breaks starting at 7 p.m.
Proposals to allow nonstop stock trading have split Wall Street, with proponents saying investors want more ability to respond quickly to news outside US market hours. Opponents have warned that the quality of trading may suffer from lower volume, which can make pricing less precise.
“The SEC’s approval of our new exchange is a thrilling development that the 24X Team has been working toward for many years,” the exchange’s founder and chief executive officer, Dmitri Galinov, said in a statement. “Traders are most at-risk when the market is closed in their geographic location,” a problem that the venue will seek to alleviate, he said.
Following its proposal, 24X would offer three sessions that start at 4 a.m. in New York and extend to 7 p.m. Once it’s able to meet certain data requirements, the venue may add an overnight session from 8 p.m. until 4 a.m., according to the SEC’s order. The schedule would run from Sunday evening through Friday evening.
Off exchange, overnight trading has already become more common since the pandemic, with firms such as Robinhood Markets Inc. and Interactive Brokers Group Inc. enabling customers to buy and sell US stocks 24 hours a day, five days a week on Blue Ocean’s alternative trading system.
Underscoring the growing interest among trading venues to capture that business, the New York Stock Exchange recently filed an application of its own, looking to offer trading 22 hours on weekdays.
The SEC’s approval of 24X’s application drew swift criticism from consumer advocacy group Better Markets, which predicted it will harm investors and damage markets.
“Retail investors trading during an overnight session will be trading in a market where there are few buyers and sellers, and where prices will be more volatile and less favorable than during normal hours,” Benjamin Schiffrin, the group’s director of securities policy, said in a statement. “This means that, during overnight sessions, retail investors will only get the best prices in a bad market, thereby losing money if they had traded during normal business hours.”
--With assistance from Lydia Beyoud.
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