web3: Nasdaq to Introduce Night Trading Hours to Compete in Crypto Market

CoinWorld reported:

Nasdaq plans to add a new night trading session during Eastern Time, extending the U.S. stock trading day to 23 hours, five days a week. This adjustment has been approved by the U.S. Securities and Exchange Commission, and the exchange expects to launch it on December 6, provided that the securities information processing system is ready.

Night Trading Set to Launch in December

Under the current schedule, Nasdaq's trading hours are from 4 AM to 8 PM Eastern Time, covering pre-market, regular, and after-hours trading. The new plan will add a night session from 9 PM to 4 AM the following day, with a one-hour market closure from 8 PM to 9 PM for system maintenance, testing, corporate actions, and trade settlement.

The night session will start at 9 PM on Sundays and run until 8 PM on Fridays, remaining closed on weekends. Nasdaq states that all NMS stocks will be eligible for night trading, but the trading rules will be stricter than during regular hours.

Limit Orders Only

According to the plan, the night session will only accept limit orders, while market orders and certain types of linked orders, opening orders, and closing orders will not be available. Participants will also need to use a dedicated night trading access port.

This means that while Nasdaq is extending trading hours, it has not designed the night session to have the same liquidity environment as daytime trading. Both the exchange and regulators have noted that extended hours typically come with lower liquidity and greater volatility.

Targeting Crypto Market's 24/7 Trading

Nasdaq explicitly stated in regulatory documents that this move aims to capture order flow, targeting investors who are already accustomed to trading around the clock on crypto assets, tokenized assets, and tokenized securities platforms. The documents also mention that this adjustment may prepare the exchange for future participation in the digital asset market.

In recent years, the 24/7 trading model of cryptocurrencies like Bitcoin and Solana has changed investors' expectations regarding market hours. In the event of geopolitical conflicts, macro data releases, or sudden corporate news, investors do not have to wait for the exchange to open the next day to react, which has been a clear advantage of the crypto market over traditional securities markets.

With the addition of night trading, this gap will narrow on weekdays. If a listed company has significant developments late at night Eastern Time, investors will be able to trade the relevant stocks directly during the night session without waiting for the next day's regular trading to begin.

However, there are still significant differences between the U.S. stock market and the crypto market. Nasdaq will remain closed on weekends, while the crypto market continues to operate 24/7. Whether longer trading hours will bring sufficient liquidity depth for traditional exchanges remains a key observation point going forward.

Rising Demand for Overseas Funds

Nasdaq President Tal Cohen previously mentioned that by June 2024, the scale of U.S. stocks held by overseas investors is expected to rise to $17 trillion, a 97% increase since 2019. Against the backdrop of rising demand for cross-timezone trading, more investors have begun using alternative trading systems and digital asset platforms during U.S. stock market closures.

Nasdaq's extension of trading hours indicates that traditional financial institutions are attempting to keep more trading activity within regulated stock markets. Although this is not yet 24/7 trading, it is a step toward nearly around-the-clock trading in the U.S. stock market.