The outlook for 24-hour trading in 2022 is “bright”: 24 Exchange CEO
24-hour trading is perhaps closer than many realize, said the CEO of an exchange trading with the Securities and Exchange Commission to bring 24-hour trading to the US market.
“The outlook is bright enough for us to approve it in 2022,” 24 Exchange founder and CEO Dmitry Galinov told CNBC’s “ETF Edge” on Thursday.
Launched in 2020 and backed by hedge fund billionaire Steve Cohen, 24 Exchange hopes to complete talks with the SEC by the end of December and receive a license to start operating next year, Galinov said.
The company specializes in currency, cryptocurrency, and equity trading and aims to enable its clients to trade various types of assets with minimal friction and at low cost.
Crypto trading has created a huge demand for a 24-hour exchange, Galinov said.
On the equity side, “if you look right now at what’s trading after hours shortly after 4pm, it’s a very small amount. It’s only 4%,” the CEO said. âBut if you look at cryptocurrencies, over a third of cryptocurrencies are trading outside normal hours, on weekends and so on. But these are the same traders.â
Traders around the world are also asking for better access to U.S. stocks, with many banks and large hedge funds telling 24 Exchange they are excited about its pitch, Galinov said.
The SEC’s stated concerns about extended trading are potentially limited liquidity, large spreads, higher volatility, price uncertainty and professional competition from institutional traders, according to its website.
However, Galinov paints a different picture: he describes his company’s dealings with regulators as “very productive” and “focused on the small details.”
The move does raise some concerns, however, said Dave Nadig of ETF Trends in the same interview. “I am optimistic about the idea. I am skeptical of the immediate demand,” said the chief investment officer and chief research officer of the company.
Aside from demand from crypto traders, problems could arise with products like exchange-traded funds, which trade baskets of stocks, Nadig said.
“I would be very skeptical of trading an ETF based on the after-hours news, because I think it’s inconceivable that there is so much liquidity that you could actually trade entire portfolios at two o’clock. in the morning on a Thursday, “he said.
Still, Nadig acknowledged that 24-hour trading was probably inevitable.
âIf we’re talking two, five, 10 years from now, I think we’re heading towards a more universal 24/7 global market, it’s just a matter of how to get there. it’s just to be skeptical, âhe said. âThe secondary market volumes are slim. You can pull out any given stock that trades on earnings and you will see the incredible spike in liquidity at, say, 4:05 am, then the immediate drop in liquidity that follows. produced thereafter. “