Why 24/7 Trading is a Bad Idea

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The New York Stock Exchange and Nasdaq have applied for regulatory permission to extend their trading hours to 22 and 24 hours daily, respectively. Nasdaq expects to implement round-the-clock trading from the second half of 2026. The London Stock Exchange is considering similar extensions, according to Financial Times. Several retail brokers already facilitate overnight trading through alternative platforms and "dark pools" -- off-exchange venues that operate during non-standard hours. Robinhood began offering all-night trading for select stocks in May 2023, while Charles Schwab announced plans to expand its overnight trading service to 1,100 securities this July. Economist argues that 24/7 trading is a bad idea. The publication writes: The problem with such trading is that price discovery can be fraught with difficulty. In fact, this is partly why institutional investors like dark pools: their lighter reporting requirements, compared with exchanges, allow big orders to be executed without alerting the wider market beforehand, which would move the price. Professionals taking the other side of these trades accept the risks and know how to navigate them. Amateurs, getting a worse price than they might have done in daylight, often do not. The witching hours are currently when all manner of dull, but vital, post-trade processes take place, from settlement and valuation to the reconciliation of mistakes. Once trading is non-stop, there will be no pause for the financial plumbing to clear. Nor for traders to rest in the knowledge that the market is resting with them, so there is no need to refresh their screens. In today's always-on world, stock exchanges' limited opening hours might seem old-fashioned. But get ready to miss them once they're gone.Read more of this story at Slashdot.