• Charles Schwab Corp is expanding its trading services to include all stocks in major U.S. indexes and hundreds of ETFs in its 24-hour trading platform.
• This move is in response to growing interest in extended hours trading among retail investors.
• James Kostulias, head of trading services at Schwab, revealed that about 90% of the customers expressed interest in participating in 24-hour trading.
• The expanded trading capabilities will be powered by the platform operated by Blue Ocean Technologies LLC, and the rollout is expected to be completed midway through the first quarter of 2025.

Charles Schwab Corp has announced a significant expansion of its trading services. The brokerage plans to include all stocks in major U.S. indexes and hundreds of ETFs in its 24-hour trading platform. This move is set to commence in about two weeks, according to a statement released by the brokerage.

The strategic decision comes in the wake of a growing interest in extended hours trading among retail investors. This burgeoning interest is prompting brokers and exchanges to broaden their offerings.

In a similar vein, the New York Stock Exchange, a division of Intercontinental Exchange, recently announced its intention to file for permission to extend its trading hours to 22 hours each business day. This move is indicative of the changing landscape of the trading industry, with more and more players looking to cater to the evolving needs and preferences of investors.

James Kostulias, head of trading services at Schwab, revealed that about 90% of the customers surveyed in their latest Traders Sentiment Survey expressed interest in participating in 24-hour trading.

Demographic Shifts and Market Trends

Kostulias attributed this high level of interest to the changing demographics of Schwab's client base. He noted that nearly 60% of the households that Schwab added as clients in the first half of 2024 are headed by individuals under 40 years of age. These younger clients seem particularly likely to have an expectation that they will be able to trade any time, anywhere.

This trend is not unique to Schwab. Interactive Brokers launched its own overnight trading platform a year ago and has seen volumes in those overnight sessions grow by an impressive 500% since then. Robinhood Markets Inc. also launched overnight trading in May 2023. The trend towards 24-hour trading is gaining momentum, with other players in the market also looking to get in on the action.

24Exchange, a Bermuda-based platform backed in part by hedge fund manager Steve Cohen, is seeking regulatory approval to offer 24/7 trading in U.S. stocks. This move is indicative of the increasing competition in the market, with more and more players looking to cater to the evolving needs and preferences of investors.

Regulatory Considerations and Future Prospects

Schwab has outlined a gradual rollout of the expanded trading capacity, starting with its most active traders. The process won't begin until the week after the Nov. 5 U.S. presidential election. The expanded trading capabilities will be powered by the platform operated by Blue Ocean Technologies LLC, which also underpins overnight trading for Robinhood Markets Inc. and other U.S. brokerages.

The rollout is expected to be completed midway through the first quarter of 2025. By this time, Schwab clients will have access to overnight trading in all stocks listed on the Dow Jones Industrial Average, the Standard & Poor's 500 Index, and the Nasdaq 100 Index, as well as hundreds of ETFs. Currently, Schwab offers overnight trading in only about two dozen ETFs.

Securities and Exchange Commission Chair Gary Gensler recently addressed the issue of extended trading hours at a conference. He emphasized that regulators' goals would include ensuring these markets are transparent and that investors are protected from pockets of illiquidity.

The move by Schwab and other brokers to expand 24-hour trading represents a significant shift in the trading landscape. This shift is driven by changing demographics and the increasing demand for flexibility and accessibility in trading. As the industry continues to evolve, it will be interesting to see how these changes impact the market and the regulatory landscape.

As we approach the 50th anniversary of the establishment of the Commodity Futures Trading Commission in 1974, the current development in the trading industry underscore the industry's resilience and adaptability.