Wall Street is headed toward 'always on' -2-

On Aug. 5, 2024, Blue Ocean ATS, an alternative trading system known as BOATS, experienced a temporary outage at around 1:45 a.m. Eastern time caused by high trading volumes during a global market selloff. The selloff had been triggered by a weak U.S. jobs report that fanned recession worries, as well as by the sudden unwinding of the Japanese yen (USDJPY) carry trade.

The outage led to the cancellation of transactions in South Korea totaling 630 million won (USDKRW) (about $435 million at the time) and affected about 90,000 customer accounts. About 70% of the overnight market crumbled following Blue Ocean's system issue and the subsequent decision to halt trading on BOATS, according to Jason Wallach, chief executive of the Chicago-based broker-dealer which operates rival Bruce ATS. South Korea's regulator and broker-dealers agreed to halt trading on BOATS during local daytime hours, which correspond with overnight hours in New York.

"Certainly, the primary lesson learned was about the demand," Wallach said in an interview. "Some market participants may have looked at overnight trading as a novelty. The reality is that we, as an industry, are still in the early innings of a 24-hour trading day, but it is here to stay, both domestically and internationally."

South Korean brokerages resumed daytime trading of U.S. stocks this month. But they are required to only access the U.S. overnight trading session via American brokers that have access to at least two alternative trading systems. Bruce ATS helps brokers satisfy the requirement from the South Korean regulator.

"The need to get infrastructure right is extremely important," Wallach said - adding that a robust and trustworthy trading system must be in place, given the likelihood of increased demand and the possibility that U.S. regulators won't be up overnight to step in if something goes wrong.

More than anything, Wallach said, "it's about bringing established technology already tested and proven for core-session trading to the overnight market to provide the guardrails, stability and transparency that brokers and investors expect - creating a safe, compliant venue for serious trading after the bell."

The U.S. currently has three key alternative trading systems that can handle overnight sessions for U.S. stocks in the future: BOATS, Bruce ATS, and Moon ATS, the latter of which is owned by OTC Markets Group (OTCM). Major broker-dealers work with these alternative trading systems to provide their clients with extended-hours trading.

"We firmly believe that we are at a point now where, with three ATS, we have an ecosystem that can support the demand for resiliency expected of U.S. markets," Wallach said.

While there's been a good deal of progress made, the NYSE, Nasdaq and Cboe have released "very little new information on timing," noted Wallach, adding that he has not heard of anything final. In addition, although the DTCC appears to be on track to increase its clearing hours to support extended overnight trading of U.S. stocks by June of next year, "SIPs need to be operating" during those extra hours, he said.

'U.S. exceptionalism'

Back in Asia, ViewTrade's Gangwani foresees double-digit growth over a period of many years, based on the notional value of U.S. stocks being traded by the whole industry during the entire 24/5 session from Asia. This notional value now stands somewhere between $900 million to $2 billion each night, up from roughly $400 million to $600 million a night a few years ago.

In his view, "overnight markets are slated to grow exponentially." Once more exchanges get involved, institutions that were on the sidelines will come in, bring more liquidity and make markets more efficient. And this should encourage even more participation - creating a virtuous circle of innovation, demand and monetization known as the "flywheel effect."

There is an "aspiration and demand to be a part of the U.S. growth story and U.S. exceptionalism," Gangwani said, referring to the term used to describe America's unique and special role in the world relative to other nations. Extended overnight trading "means more people will be able to participate in this growth story," which also adds more liquidity to the overnight market.

"Now, they can trade U.S. stock markets when they want to trade," he said, "rather than being awake in the middle of the night."

Gordon Gottsegen contributed.

-Vivien Lou Chen

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11-13-25 1035ET