There’s an old adage describing the realities of war that increasingly applies to the stock market experience – long stretches of boredom punctuated by moments of terror.
This isn’t ideal, for a variety of reasons. Some recent studies have found that such heavy concentration of trading can distort stock prices. Trading volumes through the quieter hours of the day may also suffer. And yet the stock market is largely stuck in an era when floor traders hollered into land lines until precisely 4 p.m. But a push to modernize stock trading is gaining traction.There is clearly demand. Some discount brokers like Robinhood already offer a version of overnight trading facilitated by private exchanges called “dark pools.”
Giving investors the opportunity to manage risk or react to late news would improve access and arguably make the financial markets more efficient.A new study by German researchers examined trading on a number of European exchanges, which have also seen great volumes of stock trading pushed to the end of the day.
“There will still have to be a closing point, if not literally, then figuratively,” Mr. Caldwell said.