Do the benefits of 24-hour trading outweigh its costs?

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The Benefits of 24-Hour Trading May Not Outweigh its Costs

There is limited historical evidence to suggest that the advantages of round-the-clock stock trading surpass its associated expenses. While proponents point to potential benefits such as attracting younger investors and enhancing competitive positioning through faster settlement times, expert analysis indicates that significant drawbacks may negate these gains. The assertion is that the operational complexities and the scarcity of market-moving events outside traditional hours render the concept largely unproductive.
Expert Skepticism Regarding 24-Hour Trading Benefits

Steve Hanke, a professor of applied economics at Johns Hopkins University, has expressed considerable doubt about the efficacy of continuous trading. He noted that historical data provides scant support for the notion that the benefits derived from 24-hour trading outweigh its inherent costs. Hanke further elaborated that significant market-moving events are infrequent outside of standard New York City business hours, and he characterized night trading as a "waste of time."
Potential Advantages and Counterarguments

Despite skepticism, the move towards 24-hour trading is being driven by several potential upsides. The development of platforms offering "instant settlement" through digital tokens could represent a significant competitive advantage for exchanges like the New York Stock Exchange (NYSE) and potentially NASDAQ. Furthermore, the ability to trade at any hour might appeal to a younger demographic of investors who are accustomed to the constant availability of cryptocurrency and other digital asset markets. It is also suggested that extended hours could attract investors located outside the Americas.
Operational Realities and Investor Preferences

The practicalities of implementing and managing 24-hour trading present considerable challenges. Historically, physical presence and manual record-keeping were necessary, making continuous trading impossible. While digitization has changed this landscape, the appeal of round-the-clock access remains limited for many. Traditional institutional investors, who manage substantial capital, are generally disinclined to trade outside of conventional business hours, particularly as banking services often remain closed on weekends. This suggests that the primary beneficiaries might be a specific segment of retail investors rather than the broader market.

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Do the benefits of 24-hour trading outweigh its costs?

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