Soon we’ll be rocking around the clock.  Which raises the question: Does 24-hour trading foster capital formation?

By the way, I’ve been invited to sit on panel Sep 17 on 24-hour trading that the SEC has organized at its HQ in Washington DC. 

Why? Because – and I’m not making this up – there was NO ONE else from our community on the panel and one of the SEC commissioners said, “This can’t abide.”

I inserted the word, “abide,” borrowing from the Big Lebowski.

For you NIRI members, our professional association has a survey in support of gathering feedback ahead of the Roundtable.  You’ll find it here.  Please weigh in!

If you’re trying to catch up with the theme today, it’s looming 24-hour trading.

Well.

Technically the US stock market will embrace trading on a spectrum between 23 hours, five days a week, to 8a to 5p. Depending on the exchange.  And whether it’s options or equities. 

Not even the Nasdaq and the NYSE quite agree.  The latter will offer trading from 130a to 1130p – 22 hours a day, five days a week.  The Nasdaq will be closed only from 8-9p ET, offering 23 hours a day weekdays (holidays excepted).

I get why the exchanges are doing it.  And why IEX is not doing it, which is also an exchange.  IEX does not host listings. It serves institutional clients and has moved up to fourth largest behind the Nasdaq, the NYSE floor, and NYSE Arca. 

IEX sees no purpose in fragmenting liquidity further than it already is (my words, not theirs). Or to use an analogy, they don’t think there’s a reason to operate an all-night diner when all their customers come for breakfast and lunch. 

But the listing platforms have lost half their market share to broker alternatives. The CBOE volume summary shows that in the last five days, 52% of volume traded away from exchanges.   

Exchanges wanting to stem the tide feel a competitive urge to offer an all-night diner. The question for listed companies is: Does it serve your shareholders’ interests? 

The short answer is we don’t know because 91% of volume occurs during market hours. Add premarket trading from 8-915a ET and it’s 95%.

So if the exchanges build a new edifice for all-night dining, will diners stop eating at 3pm and chow away at 2am instead?

Dunno.

Here’s what I do know.  ETFs are wildly popular and dominating fund flows – crushing all other forms of flows combined, to the tune of about $1.3 trillion monthly creates/redeems, says the Investment Company Institute.

Precisely because they do the opposite. They are manufactured in large BLOCKS, off-market.  ETFs skirt the entire trading complex, in effect.

Now, follow me here.  This is the wholesale, or primary, market for ETFs that’s not available to small investors, only accessible to Blackrock and its ilk and the brokers who process ETF creations and redemptions.

This is not a dissertation on how ETFs work. It’s observation on what money wants. 

What money wants is size. How do we know?  The ETF market.  The fact that 150 stocks are nearly 75% of market cap because they have a mean size of $450 billion.  Institutions need size, stability, liquidity.

CES, the consumer electronics show, brings nearly 150,000 people and tens of thousands of vendors to Las Vegas in January. That’s an auction market. Not all-night trading. 

So to speak.

Aggregating demand and supply is the job of markets.  So is a market that disburses trading round the clock a “market,” or just a data network with a bunch of traffic on it?  Is that a good way to set prices?

Again, I don’t know. If the future is one run by AI agents managing our investments and transacting around the clock, I suppose that’s good. But how do you pool capital to back big endeavors?

Nvidia is doing that on its own. It’s cutting out the market. 

Now, let me drop the Cassandra motif – because I’m not opposed to 24-hour trading – and take the other side.  I don’t want to suffer the curse of Apollo, forever right and never believed. 

Maybe it transforms our stock market into an efficient, disintermediated price-setting mechanism.

Maybe it shifts investor relations from telling the story to running an army of agentic intelligences that gather all the data and have it waiting every day for you to synthesize for the Board and c-suite with a few short sentences. 

Maybe it shifts capital-formation – the act of gathering risk-taking assets to back growth enterprises – to an AI-powered endeavor too, where machines syndicate the digital landscape.

Maybe it’s just. The future. 

I just hope we don’t find ourselves quoting Yogi Berra, who said the future ain’t what it used to be.