The United States will have the first 23-hour/day exchange program

24X National Exchange, a US stock exchange operated by a startup that aims to handle 24-hour trading, has obtained approval from the US Securities and Exchange Commission (SEC), Bloomberg reports.

24X, backed by billionaire investor Steve Cohen's Point72 Ventures, will offer trading sessions during the day (according to the US time zone) and, later, will allow overnight trading, according to the SEC.

Under the plan, the trading schedule includes a one-hour break, starting at 7 p.m.

Proposals to allow 24-hour trading in stocks have divided Wall Street, with supporters arguing that investors want an expanded ability to react quickly to news outside of US market hours. Opponents, however, have warned that the quality of securities trading could suffer due to lower trading volume, which could make prices less accurate.

"The SEC's approval of our new exchange is a step forward that the 24X team has been working towards for many years," said the exchange's founder and CEO, Dmitry Galinov, noting: "Traders are most at risk when the market is closed in their geographical location, a problem that our new exchange will seek to address."

Under the plan, 24X will offer trading sessions that begin at 4 a.m. in New York and run until 7 p.m. Once it is able to meet certain data requirements, the exchange may add an overnight session from 8 p.m. to 4 a.m., according to the SEC. The program will run from Sunday evening to Friday evening.

Outside of the stock market, overnight trading has become more common since the Covid pandemic began, with firms such as Robinhood Markets Inc. and Interactive Brokers Group Inc. allowing clients to buy and sell U.S. stocks 24 hours a day, five days a week, under the Blue Ocean alternative trading system.

In a sign of growing interest, the New York Stock Exchange (NYSE) recently filed with the regulator, seeking to offer 22-hour trading on weekdays.

• Criticism from Better Markets

The SEC's approval of 24X's overnight trading application quickly drew criticism from consumer advocacy group Better Markets, which said the new platform would hurt investors and markets.

Benjamin Schiffrin, the group's director of securities policy, said: "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. This means that during overnight sessions, retail investors will only get the best prices in a bad market."

• Sylvain Thieullent, Horizon Trading: "Non-stop trading presents a lot of opportunities"

The approval of 24X will have significant effects on the market structure in the region, as well as the potential for other stock exchanges to follow suit in light of the SEC's decision, according to thetradenews.com.

Sylvain Thieullent, CEO of Horizon Trading Solutions, said, quoted by The Trade, that the shift to non-stop trading presents a lot of opportunities, but also complexities, emphasizing: "As this SEC approval demonstrates, exchanges, traditionally limited by time zones, may now want to gain ground in a world where trading has no boundaries (...) Trading in the middle of the night requires the need to navigate potentially volatile markets with extreme precision and speed. Outside of regular trading hours, liquidity tends to be lower. Reduced liquidity can result in wider bid-ask spreads and increased price slippage, making it more difficult for high-speed traders to execute trades at the desired prices. Only algorithms capable of analyzing large volumes of data, detecting patterns and executing trades with fraction-of-a-second precision will separate the winners from the losers. With regulators scrutinizing every move, ensuring the integrity and reliability of these algorithms will be essential."