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Overnight trading gains steam as clearing firm to extend hours - BLOOMBERG
The main firm responsible for clearing U.S. stock trades plans to extend its hours of operation to support the growing interest in trading around the clock.
The Depository Trust & Clearing Corp. will begin clearing equities trades 24 hours a day, five days a week by the second quarter of next year, the company said in a statement Tuesday. The move, which needs regulatory approval, will take place in phases over the coming months to support both off-exchange and on-exchange stock venues.
“As interest in near round-the-clock trading of U.S. equities grows, we are meeting this demand by extending our clearing hours to support our clients and further strengthen the safety and soundness of the markets,” Brian Steele, a managing director and president of clearing and securities services at DTCC, said in the statement.
Extended trading hours became more popular during the pandemic and demand has taken off since then, allowing investors to react to market-moving events immediately. Exchanges have jumped on board to support the growing trend, announcing their intent to offer extended hours at the largest venues, including the New York Stock Exchange, Nasdaq and Cboe.
But the industry has a ways to go before overnight trading can actually happen on those venues. For it to take effect on public stock exchanges, the clearing and data that reflect real-time trading needs to be updated to accommodate the extra hours. The DTCC said it’s working with market participants, including Sifma, the trade group for the US securities industry.
Clearing firms such as DTCC verify purchase and sale orders and ensure funds are properly transferred, a key part of the settlement process.
Offering additional hours “presents several challenges for the industry that will need to be overcome to minimize disruption to firms and existing post-trade clearing and settlement processes,” Steve Byron, head of technology, operations and business continuity at Sifma, said in the statement.
Overnight trading is currently supported through brokerage firms such as Robinhood Markets Inc. and Interactive Brokers group Inc., which allow their customers to buy and sell US stocks 24 hours a day, five days a week on off-exchange venues including Blue Ocean and new entrants such as Bruce Markets alternative-trading system
