Dec 18 (Reuters) - There is "no doubt" that round-the-clock trading will be the norm across markets, Tradeweb's Chief Executive Officer wrote in a letter published on Thursday, highlighting the pace at which the idea is gaining traction across Wall Street.
Billy Hult, who oversees the rates and credit trading platform handling around $2.9 trillion in average daily trading volume, said he expects 2026 to be the year tokenization accelerates, leading to faster settlement times and broader investor access.
"The convergence of digital and traditional finance... will fundamentally alter the fabric of our financial markets," Hult wrote in the letter to the company's clients.
The remarks, from the leader of a company that sits at the heart of financial market plumbing, underscore the rising popularity of the once-fringe concept of 24/7 trading.
Nasdaq, home to some of the biggest tech companies in the world, is seeking approval for stocks to trade 23 hours a day, five days a week, Reuters reported earlier this week.
Major brokerages such as Robinhood and Charles Schwab, as well as exchange operator Cboe Global, have also extended trading hours for stocks in recent years.
LIQUIDITY CONSTRAINTS, COST PRESSURES
While round-the-clock trading could lower barriers to investing, critics warn it may also introduce price distortions because of limited liquidity in overnight hours, which can leave investors more exposed to sudden moves.
Trading firms, meanwhile, could react to market-moving events immediately but may have to increase staffing and operational costs.
The push for longer sessions is partly driven by the unprecedented global appetite for U.S. assets. Foreign ownership of U.S. securities reached $30.9 trillion as of June 2024, according to the latest data from the Department of Treasury.
A paper in August by researchers at Carnegie Mellon University and Rice University said near-continuous trading, with only a brief daily pause, works best for large, highly liquid markets, while smaller, less active markets perform better with longer breaks.
(Reporting by Niket Nishant in Bengaluru; Editing by Krishna Chandra Eluri)
