why would a market open for long periods cause liquidity issues? I would expect that it _increases_ liquidity, as there'd be a trade available at all times, rather than just business hours.
People might misunderstand that there is similar liquidity at all operating hours, and try to trade in size on that basis and be alarmed by price changes , when the liquidity is actually during specific times. Right now when prices go haywire outside regular market hours, there's a asterisk, stop loss orders and margin calls aren't necessarily triggered or executed, and people tend to wait patiently to seek liquidity market open.
Until it's pros themselves responding to out-of-hour VAR shocks, and doing it outside hours. Not that it doesn't already happen, but its a matter of degree.
This sounds risky: is the goal truly 100% uptime? Real 24/7 is difficult, even in safety-critical fields. When would you ever push out fixes or do live testing?
> The survey comes as start-up 24 Exchange, backed by Steve Cohen’s Point72 Ventures fund, is seeking SEC approval to launch the first round-the-clock exchange. The filing is the second attempt for 24X, which withdrew a proposal last year over operational and technical issues.
I know it is quite common, but I always found it strange that The (Free) Market™—where stocks are traded—was itself a commercial entity and traded on the same exchange(s) that it ran.
Any particular stock market is not "the" market or "the free" market. It's just one of many. There are lots of stock markets, and there are lots of other markets, from commodities to real estate etc. Companies sometimes list on multiple stock markets.
And markets are generally private entities, though they sometimes involve government regulation around information accuracy, transparency, antitrust, etc. This isn't something unique or peculiar to stock markets.
And sure they can trade on their own exchange. It's really not any different from how you can put "Google Trends" as a search topic into Google Trends.
I think the point is that if you didn't already know the way people talk about The Stock Market you would assume there was only one and that it was orchestrated by the government (perhaps via a private company partnership).
My concern is simply labor. If trading is 24/7 that means people will be working or on call 24/7. Not much sympathy for finance bros, but for the tech people and others.
Then again, it may create some jobs if they have to hire night and weekend staff.
It's a regular option to place limit orders, I'd be surprised if you couldn't.
And no this is different then pre market or after hours. It's just a standing order to execute at certain price conditions, it'll happen automatically by your broker or timeout.
I suppose they want more transactions and thus more revenue.
Edit: During the Internet bubble around 1999/2000 several markets extended their opening hours by a few hours. Later, after the bubble had burst, they went back to the old opening hours.
Most trading happens just after market open (reflecting information released since the market closed the previous day) and just before market close (because end-of-day prices are important in many contexts).
So maybe there could instead be a chill stock exchange which is open for just two brief 15-minute windows, one in the New York morning and another in the evening.
It's not really clear that it serves any societal purpose to have trading all day long. It's just a lot of traders super glued to the news and trying to react instantly. And trades take a couple of days to settle anyways.
I'm really curious if anyone can point to important economic efficiences that would be lost if trading was restricted to two 15-minute windows per day.
Wouldn't it be more relevant to reduce the time it takes to settle trades? That seems anachronistic, like sending checks by snailmail. We have so many computers in the 21st century, and most money is digital already. Does settling/clearing on a delay actually serve a purpose, or just enables someone to collect rent?
It serves the purpose of bringing all the market participants together to have the deepest market at the time of trading. This prevents pricing swings based on who happens to want to trade right this minute. Trading more frequently actually allows brokers to collect rents in the form of a spread for the “service” of buying from you now and selling to me later. If we had a daily auction, we could avoid the need for such a broker spread.
It's funny that the article explaining why it is good and necessary to have T+2 settlement also mentions that markets are moving to T+1 settlement. To me that seems like a contradiction. Must be my cluelessness talking.
While I also agree that there are downsides to keeping the exchange constantly churning, I worry that it's hard to align the open moments with the times when market-shifting news arrives. We can't expect the Bhopal plant to explode just in the 15 minutes when Dow Chemical is active.
Still, I agree that we need to think again about the focus on hyper liquidity. When I see high speed trading, I feel like it's just an endless competition to steal the bid-ask spread from the suckers who are actually trading.
> “I worry that it's hard to align the open moments with the times when market-shifting news arrives. We can't expect the Bhopal plant to explode just in the 15 minutes when Dow Chemical is active.”
With the current system there’s only a 27% chance that global news arrives when the world’s most important market is open. It’s practically a completely arbitrary number.
So it might be more fair to everyone to either reduce the number to a minimum, or expand it to as close to 100% as possible.
But that's the whole point -- that most news doesn't happen during trading.
That you have ample time to digest the news from overnight to trade in the morning, and ample time to digest the news from the day to trade at the end of the day.
There's definitely importance for prices to change daily in response to news. I'm questioning any economic or societal need for prices to change by the second/minute, or even hour, in response to news. All it does is funnel some extra profits to professional traders who watch the markets and are subscribed to every news alert, and disadvantage everyone else who just stays on top of industry/market news like a normal person.
It would be annoying from a user perspective because i would have to be at a computer for only those fifteen minutes when i wanted to rebalance my portfolio or risk automated buys and sells working properly.
it would probably change the value/ reaction to information assymetry which might be good or bad. It would probably decrease opportunity for me to buy stocks i like at a lower price by sitting on bids and waiting for the random walk to push the price down to my bid just due to noise.
> So maybe there could instead be a chill stock exchange which is open for just two brief 15-minute windows, one in the New York morning and another in the evening.
Typically, more shares trade in the first hour than during any other, as orders placed when the market was closed are processed.
This is also true. Intraday trade halts happen on occasion and for good reason, and removing a natural brake would lead to further exploitation and problems.
The IEX stock exchange was made
to make longer term trade more attractive but I think the vision was too limited to have the impact they were hoping to have.
This would likely making prices very erratic, as people would fight to get their shares bought or sold in that window by selling below, or buying above, what they would otherwise look to buy/sell it.
I've had a similar idea. The basic premise is that each company's stock trades once a day, at most, in a Dutch auction. On the sell side, you inform the market that you'll be placing stock in a company on sale, and it sells at a known time, before which you can withdraw intent to sell.
On the buy side, you can place and withdraw bids at any time, and when the auction starts, those bids are part of the auction. This works as a price signal to draw sellers in, or convince them to withdraw.
The price paid for all the stock is pooled, and each seller gets a share proportional to what they sold.
This would eliminate HFT (good), and should allow for price discovery and other useful market forces to do their work. It would chill out the market and dispose of the heady cocaine-fueled paper-chasing casino aspect of it. The market would converge on a daily agreement about the stock price of that company, without all the random walks and HFT coin shaving, which is not economically productive behavior.
There should be no stock market. At least not one that is operated by people.
The market for assets would be more efficient if we tokenize the assets. Then they can be transparently traded according to fixed rules. No opening times, no downtimes, no questions about how the system works.
The stock market should be an equalizer, but this will mostly benefit buy-side firms that have enough headcount or the infrastructure to support 24/7 trading.
Conversely: we have computers now. Why shouldn't stock traders get the benefit of the increased productivity? Maybe the stock market should go to a four day week. Maybe just a few hours per day.
It isn't going to change anything in the grand scheme of things. The market swings on news, and there's mostly no news after hours. And even when there is, people who want to trade already manage to do it 24x7 in a variety of ways (hence the wild swings sometimes in between market closing and opening the following day).
It's announced after hours because the market is closed. If it stays open 24x7 then there's no reason not to announce the news in the middle of the day. So after-work trading will still be minimal even if the markets remain open.
As I understand it, most company earnings are released after hours and many important press releases are held until the market has closed to allow the news to be “digested” offline
Cryptocurrency exchanges are typically 24/7 and as someone who does occasional trading, I can confidently say that it is very stressful: anything can happen while you sleep. So you sleep less when you have some open positions.
Yeah, I'm really not sure how we got to the current state of things. I would love to hear an explanation of how the various financial instruments are actually beneficial to people in the outside world because it certainly doesn't look that way.
IIRC this topic was mentioned in the Game Theory chapter of ‘Algorithms to Live By’ as an example of Mechanism Design, but I don’t have it handy to offer anything more than a bread crumb reference from memory.
Yes. Everyone who proposes restricting trading, or limiting to a few auctions, or claiming HFT doesn’t add social value, is simply misinformed.
Assets which have continues liquidity have more utility for owners. Not only can markets instantly digest new information in a way that is fair, but also when there is no information and prices are stable, participants can make decisions for their own personal objectives at the very moment it’s most relevant to them. Imagine you can sell a few shares of your Nvidia holdings at midnight on Friday and it funds your Paypal card you swipe a few seconds later at the nightclub? There is absolutely no technical downside to expanding trading hours.
HFT and electronic markets overall have massively decreased the transaction costs within asset markets, we are talking multiple orders of magnitude.
Unfortunate HN is infiltrated with a large contingent of technically literate people who are completely economically illiterate, likely due to a systemic problem with western education system. For this reason they believe nonsense like markets are unfair, HFT is a zero sum arms race, highly regulated restricted auctions is a good idea, capitalism is evil, landlords are evil, governments are good and protect the people. All of which are completely idiotic beliefs that can only come from failure to have been taught economics and read history.
Obviously stock markets can go 24/7 and it a strictly good thing.
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[ 3.9 ms ] story [ 129 ms ] thread* https://archive.ph/EkVPo
On my side: all the content is available & no pop-ups.
why would a market open for long periods cause liquidity issues? I would expect that it _increases_ liquidity, as there'd be a trade available at all times, rather than just business hours.
only because they're not knowledgable enough. And if they're an amateur, they will lose to the pros - it's a shark infested trading market out there.
I don't see any problems with that.
I know it is quite common, but I always found it strange that The (Free) Market™—where stocks are traded—was itself a commercial entity and traded on the same exchange(s) that it ran.
* https://en.wikipedia.org/wiki/Intercontinental_Exchange
* https://en.wikipedia.org/wiki/London_Stock_Exchange_Group
Any particular stock market is not "the" market or "the free" market. It's just one of many. There are lots of stock markets, and there are lots of other markets, from commodities to real estate etc. Companies sometimes list on multiple stock markets.
And markets are generally private entities, though they sometimes involve government regulation around information accuracy, transparency, antitrust, etc. This isn't something unique or peculiar to stock markets.
And sure they can trade on their own exchange. It's really not any different from how you can put "Google Trends" as a search topic into Google Trends.
Then again, it may create some jobs if they have to hire night and weekend staff.
It's actually kinda nnoying here in Australia that I have to wait for the NASDAQ to open, which means staying up later than I'd like on occasion!
I use an Australian online broker.
They do offer pre-market orders, however they do say:
> However, a limited number of buyers/sellers and volatile prices can make pre-market trading risky for novice investors.
Am I am solidly a novice investor LOL :-)
And no this is different then pre market or after hours. It's just a standing order to execute at certain price conditions, it'll happen automatically by your broker or timeout.
Edit: During the Internet bubble around 1999/2000 several markets extended their opening hours by a few hours. Later, after the bubble had burst, they went back to the old opening hours.
So maybe there could instead be a chill stock exchange which is open for just two brief 15-minute windows, one in the New York morning and another in the evening.
It's not really clear that it serves any societal purpose to have trading all day long. It's just a lot of traders super glued to the news and trying to react instantly. And trades take a couple of days to settle anyways.
I'm really curious if anyone can point to important economic efficiences that would be lost if trading was restricted to two 15-minute windows per day.
It removes friction from the market since it gives time to line things up between market participants.
For example if some assets are on loan, it gives time to the people who were borrowing it to find some other market participant to borrow it from.
https://www.bloomberg.com/opinion/articles/2024-02-28/tradin... was a good explainer
Still, I agree that we need to think again about the focus on hyper liquidity. When I see high speed trading, I feel like it's just an endless competition to steal the bid-ask spread from the suckers who are actually trading.
With the current system there’s only a 27% chance that global news arrives when the world’s most important market is open. It’s practically a completely arbitrary number.
So it might be more fair to everyone to either reduce the number to a minimum, or expand it to as close to 100% as possible.
That you have ample time to digest the news from overnight to trade in the morning, and ample time to digest the news from the day to trade at the end of the day.
There's definitely importance for prices to change daily in response to news. I'm questioning any economic or societal need for prices to change by the second/minute, or even hour, in response to news. All it does is funnel some extra profits to professional traders who watch the markets and are subscribed to every news alert, and disadvantage everyone else who just stays on top of industry/market news like a normal person.
it would probably change the value/ reaction to information assymetry which might be good or bad. It would probably decrease opportunity for me to buy stocks i like at a lower price by sitting on bids and waiting for the random walk to push the price down to my bid just due to noise.
Typically, more shares trade in the first hour than during any other, as orders placed when the market was closed are processed.
This would make for a fairer market than what we have now.
> This would make for a fairer market than what we have now.
It would also give people time to think, instead of pushing them to automated trading based on NLP processing of headlines.
The IEX stock exchange was made to make longer term trade more attractive but I think the vision was too limited to have the impact they were hoping to have.
On the buy side, you can place and withdraw bids at any time, and when the auction starts, those bids are part of the auction. This works as a price signal to draw sellers in, or convince them to withdraw.
The price paid for all the stock is pooled, and each seller gets a share proportional to what they sold.
This would eliminate HFT (good), and should allow for price discovery and other useful market forces to do their work. It would chill out the market and dispose of the heady cocaine-fueled paper-chasing casino aspect of it. The market would converge on a daily agreement about the stock price of that company, without all the random walks and HFT coin shaving, which is not economically productive behavior.
The market for assets would be more efficient if we tokenize the assets. Then they can be transparently traded according to fixed rules. No opening times, no downtimes, no questions about how the system works.
The stock market should be an equalizer, but this will mostly benefit buy-side firms that have enough headcount or the infrastructure to support 24/7 trading.
Just about all market moving company and government economic news is announced after hours when the market is closed.
As I understand it, most company earnings are released after hours and many important press releases are held until the market has closed to allow the news to be “digested” offline
Assets which have continues liquidity have more utility for owners. Not only can markets instantly digest new information in a way that is fair, but also when there is no information and prices are stable, participants can make decisions for their own personal objectives at the very moment it’s most relevant to them. Imagine you can sell a few shares of your Nvidia holdings at midnight on Friday and it funds your Paypal card you swipe a few seconds later at the nightclub? There is absolutely no technical downside to expanding trading hours.
HFT and electronic markets overall have massively decreased the transaction costs within asset markets, we are talking multiple orders of magnitude.
Unfortunate HN is infiltrated with a large contingent of technically literate people who are completely economically illiterate, likely due to a systemic problem with western education system. For this reason they believe nonsense like markets are unfair, HFT is a zero sum arms race, highly regulated restricted auctions is a good idea, capitalism is evil, landlords are evil, governments are good and protect the people. All of which are completely idiotic beliefs that can only come from failure to have been taught economics and read history.
Obviously stock markets can go 24/7 and it a strictly good thing.