The dream of buying Apple or Nvidia shares at 3 a.m. is closer than ever, yet a storm is brewing on Wall Street regarding the safety of such a shift. Major exchanges and regulators are sounding the alarm that a nonstop market could fracture liquidity and trap retail investors in a dangerous game. While the convenience appeals to a crypto-native generation, the risks hiding in the dark could cost regular traders more than just sleep.
The Race to Capture the Night Shift
The momentum for round-the-clock trading is undeniable and it is being driven by a fear of missing out. The New York Stock Exchange recently polled its market participants about the merits of keeping the lights on 24/7. This move signals a massive shift from traditional banking hours to a digital-first reality.
Startups like 24 Exchange are leading the charge. Backed by billionaire Steve Cohen, this firm has filed with the Securities and Exchange Commission to launch a round-the-clock exchange. Their argument is simple. They believe investors need the ability to react to breaking news immediately regardless of the time zone.
Brokerages are also feeling the pressure. Robinhood and Interactive Brokers already offer limited overnight trading on select ETFs and stocks. They have seen massive volume during geopolitical events that happen while New York sleeps. This demand proves that traders want access, but regulators are asking if the infrastructure can actually handle the load.
The push is largely a response to the crypto market where Bitcoin trades every second of every day.
Traditional finance fears losing relevancy to these digital assets if they cling to a 9-to-5 schedule. However, stocks are not crypto tokens. They represent real companies with earnings calls, dividends and audit requirements that were built for a scheduled world.
stock market ticker display illuminated in dark room
Why Experts Are Ringing the Alarm Bells
The biggest concern keeping regulators up at night is liquidity. Liquidity refers to the ease with which a stock can be bought or sold without affecting its price. During the day, millions of buyers and sellers create a deep market.
At 2 a.m., that crowd disappears.
Critics argue that splitting volume across 24 hours will thin out the market. When liquidity is low, the gap between the buying price and selling price gets wider. This is known as the bid-ask spread. A wider spread means the investor pays more to buy and receives less when selling.
Here is a breakdown of how trading conditions change significantly depending on the time of day:
| Feature | Standard Session (9:30 AM – 4 PM ET) | Overnight Session (Off-Hours) |
|---|---|---|
| Liquidity | Extremely High | Very Low / Fragmented |
| Spreads | Tight (Low Cost) | Wide (High Cost) |
| Volatility | Managed by Halts | Prone to Extreme Spikes |
| Participants | Everyone (Banks, Retail, Algos) | Mostly Retail & Wholesalers |
Price discovery becomes volatile in this environment. A single large sell order in the middle of the night could crash a stock price because there are no buyers to absorb it. This creates “gaps” in the chart. A stock could close at $100 and open at $80 the next morning because of a panic sell in a thin overnight market.
Retail Investors Could Pay the Price
The group most likely to suffer in a 24-hour market is the everyday retail investor. Institutional investors and professional trading desks have algorithms that work while they sleep. They also have the discipline to stay on the sidelines when spreads are bad.
Retail traders often trade on impulse and emotion.
Consumer advocates warn that 24/7 access encourages gambling behavior rather than investing. It creates a fear that you must watch your portfolio constantly. This leads to stress, poor decision making and overtrading.
Regulators worry that retail traders will be “picked off” by professional predatory algorithms in the quiet hours.
There is also the issue of information access. Corporate announcements are usually timed for before or after market hours to give everyone time to digest the news. If trading never stops, those with the fastest data feeds get an unfair advantage. A retail trader in California might wake up to find their portfolio decimated by news that broke in London hours earlier.
“The convenience of trading at midnight comes with the cost of entering a casino where the house has even better odds than usual.”
The Technical Hurdles and System Failures
Beyond the economics, there is a massive plumbing problem. The US stock market relies on a complex web of clearinghouses and settlement systems. These systems currently use the overnight downtime to process trades and update records.
We have already seen what happens when the tech fails.
In August 2024, Blue Ocean Technologies experienced a significant outage. Blue Ocean provides the backend infrastructure for overnight trading for many brokers including Robinhood. The system buckled under heavy volume during a global market sell-off.
This left thousands of traders stuck in positions they could not exit.
If the NYSE or Nasdaq goes 24/7, the entire backend of Wall Street needs a rebuild. The Depository Trust & Clearing Corporation (DTCC) would need to change how it manages risk and collateral. If a bank collapses at 4 a.m., who is there to cover the margin calls?
- Banks need to staff trading desks overnight which increases costs.
- Software maintenance windows will vanish completely.
- Risk management rules need to be rewritten for low-volume hours.
- Corporate actions like stock splits become harder to execute live.
Regulators at the SEC are looking closely at these operational risks. They know that a glitch in a 24-hour market could trigger a flash crash that spills over into the regular session. The cure of convenience might indeed be worse than the disease of limited hours.
