Abstract:
Starting from December 6, the four major core exchanges including Nasdaq and NYSE Arca will officially add night trading hours, and Wall Street will fully enter the era of "all-night trading" 23 hours a day. This historic expansion is designed to cope with cross-border competition in “round-the-clock trading” in cryptocurrency and prediction markets, and to accelerate the capture of incremental demand from overseas investors. According to data from the U.S. Securities and Exchange Commission (SEC), although the current night trading only accounts for about 1% of the total trading volume of U.S. stocks, its year-on-year growth rate has reached as high as 358%, showing extremely explosive power.
Institutional funds wait and see: liquidity and price differences become core concerns
The extension of trading hours has divided markets around the world. Supporters hope to break time zone barriers, but institutional investors with large sums of money are highly vigilant about potential risks.
David Easthope, senior analyst at Crisil Coalition Greenwich, pointed out that the core pain point for institutions lies in the "market quality" after the extended period - that is, liquidity and bid-ask spreads, rather than simple operational or staff scheduling issues. The agency’s survey on buy-side traders in the second half of last year (second half of 2025) showed that due to the scarcity of participants outside regular hours, forced entry may face a double blow of liquidity depletion and spread expansion, and even affect traders’ physical and mental health. However, Easthope added that buyers are psychologically prepared for the "inevitability" of this trend as regulators advance substantial reforms.
Joseph Saluzzi, co-head of equity trading at Themis Trading, bluntly expressed a lack of interest in the new regulations. He pointed out that the current pre-market and after-market trading volume of the exchange only accounts for 10% of the total volume, and institutional funds will never rush into a market with low liquidity, wide spreads and high volatility.
Jeff O’Connor, head of market structure at Liquidnet, believes that institutions are currently in “wait and see mode.” If the expansion in December can substantially improve the nighttime price discovery mechanism and reduce transaction costs, institutional funds will eventually enter the market to capture the Alpha (excess returns) in the night market.
Overseas and retail investors dominate: trading targets are highly concentrated
Overseas funds and retail investors have become the absolute dominant force in the current night trading. SEC data shows that in the second quarter of this year, overseas investors contributed 37% of the total night trading volume.
The imbalance in the structure of participants directly leads to a high concentration of transaction targets. In August this year, only 15 stocks accounted for 50% of the trading volume in the night trading, among which there were frequent "less than one dollar" low-priced stocks registered in mainland China and Hong Kong. For comparison, during regular periods when liquidity is abundant, 256 stocks are needed to achieve the same trading ratio.
Brian Hyndman, CEO of Blue Ocean Technologies, an alternative trading system (ATS) that currently provides night trading matching services, said that after the new regulations are implemented in December, existing active players will be seamlessly connected. But he also admitted that the continued absence of buyer institutions and investment banks means that the market is still missing the most critical piece of the puzzle.
The liquidation infrastructure is in place: only one hour of "empty window" is left every day
Despite disagreements on the funding side, Wall Street's underlying infrastructure is ready for an "all-nighter."
The Depository and Clearing Corporation (DTCC), which is responsible for the clearing of U.S. stocks, switched to a "24x5" model in June this year, with operating hours lasting from 8 pm on Sunday to 8 pm on Friday, New York time. At the same time, securities information processors (SIPs) responsible for distributing quotation and trading data have also been approved to extend their operating hours.
According to the latest schedule, after the expansion in December, Nasdaq and the New York Stock Exchange will add night trading from 9 pm to 4 am the next day in addition to the existing regular hours (9:30-16:00 Eastern Time), pre-market (from 4:00) and after-market (16:00-20:00).
At this point, U.S. stocks will only maintain a one-hour closing time from 8 pm to 9 pm throughout the day for system maintenance and transaction processing.
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