Curatia Analysis for Thu, Dec 19
With MOON ATS Launch, OTC Markets Group Lights the Way to Overnight Trading’s Bright Future Sponsored
 |
Jason Dibble
Co-Founder, Editor in Chief |
Last month’s launch of the MOON ATS overnight trading platform for NMS securities complements an existing overnight offering at OTC Markets Group that unlocks access to global brands with cross-traded OTC securities.
In the fast-growing world of overnight trading, that breadth of coverage could help broker-dealers and market makers spot and react to trends in retail-trading activity as they unfold — a key differentiator as all-hours trading rapidly transforms global markets.
New MOON
OTC Markets Group’s breadth of coverage has long distinguished it with investors among trading venues the world over. Now the firm is combining that calling card with its early-adopter status in overnight trading to give retail investors access to a spread of securities from across the geographic and market-capitalization spectrum.
Last month OTC Markets launched MOON ATS, an overnight trading platform that lets investors trade NMS securities listed on major exchanges from 8 PM to 4 AM Eastern Time, Sunday to Thursday.
By connecting to MOON ATS, broker-dealers will be able to tap into booming global investor demand for well-known mega-caps and ETFs in the US-listed market.
MOON ATS complements the firm’s existing OTC Overnight platform to allow round-the-clock trading in OTC equities as well as thousands of cross-traded global securities including multinational European companies and consumer brands in the Asia-Pacific region.
Prominent examples of iconic, billion-dollar brands available on OTC Overnight include Adidas, Air Canada, BNP Paribas, Bombardier, Danone, Heineken, LVMH, Nestlé, Nintendo, Roche, and Tencent.
In combination, the two platforms create an offering that is unique and powerful in its ability to meet a wide array of investor demands from retail and professional investors alike globally.
By leveraging the offering, broker-dealers can offer investors in the Asia-Pacific region expanded trading capabilities during their regular trading hours. European issuers can also gain access to Asian retail investors via the US.
US investors can meanwhile trade global securities in US dollars around the clock. That could prove particularly compelling for traders on the West Coast, where US markets open at 6:30 AM and close at 1 PM.
In addition, OTC Markets’ data feeds provide access to order-by-order information on all securities transacted via the firm’s overnight platforms. Detailed order data is also available in end-of-day flat files, making it simple to analyze historical trends and back-test strategies.
That panoramic view of global market activity could yield superior insights into retail-trading trends in the overnight space across regions as they unfold, allowing broker-dealers to better understand how to enhance their offerings.
“OTC Overnight and MOON ATS give market participants and investors access to a broad spectrum of securities on regulated trading platforms from an established, trusted institution, filling a gap in the overnight-trading space,” OTC Markets Executive Vice President of Market Data Matt Fuchs said. “Broker-dealers can take comfort in working with an experienced, regulated market operator that trades billions daily during the daytime session.”
With its September rollout of OTC Overnight, OTC Markets became one of the trading realm’s first movers in the overnight-trading space.
That phenomenon took flight in the retail sphere with the rise of always-on crypto trading and last year’s embrace of 24/5 trading by retail darling Robinhood, which revealed in March that as much as a quarter of total trading volume on its platform occurs outside traditional market hours.
More recently, rival retail brokerage Charles Schwab announced in October that it plans to steadily expand 24-hour trading capabilities on its platform to include all stocks in the S&P 500 and the Nasdaq 100 in addition to hundreds of ETFs after a survey revealed 90% of its customers were interested in the service.
The explosive retail interest that drove these moves also reinforced overnight trading’s promise in empowering investors to respond to market-moving events in real time outside normal trading hours. That promise has since sped industry adoption of the model.
Robinhood quickly expanded its own offering into prediction markets in October following a court ruling that allowed trading in the budding domain to proceed. As a result, the brokerage saw its busiest-ever overnight trading session on US election night, logging 11 times its average notional overnight volume.
Robinhood is building on that momentum by expanding into Asia. Earlier this month it announced plans to open a Singapore office in 2025 and acquire brokerage licenses in a bid to seize on potentially vast retail demand in the region. The move could catalyze the next leg of Robinhood’s growth.
The episode highlights the value of understanding retail-investor behavior across a broad spectrum of trading opportunities to capitalize on emergent trends in the overnight space — an area in which OTC Markets’ own overnight offerings position it as a leader.
Professional Turn
Retail brokerages’ success in implementing all-hours trading through the platforms of early adopters like OTC Markets and Blue Ocean has encouraged firms catering to more advanced trading constituencies to follow suit.
Interactive Brokers, which bills itself as a platform for more sophisticated retail investors and professional traders, expanded overnight-trading capabilities on its platform to include US Treasury bonds in April and contracts for difference on US equities in August. It has logged 500% growth in overnight-trading volumes in the service’s first year of operation.
Now stock exchanges are themselves testing the waters of extended-hours trading, broadening the overnight-trading movement’s scope in a shift that would more closely align trading hours in equities with those in other asset classes including FX, futures, commodities, and Treasuries.
The New York Stock Exchange in late October announced it aims to implement 22/5 trading on its Arca exchange, a key listings destination for exchange-traded products, pending regulatory approval. Then last month the SEC approved the application of 24X National Exchange, a startup backed by Steve Cohen’s Point72 Ventures, to operate a 23/5 stock exchange.
Professional trading firms’ widening embrace of overnight trading is spurring organizations responsible for stock-trading infrastructure to extend their own hours to meet growing demand. The DTCC and the NSCC, which provide clearing, settlement, risk-management, and trade-reporting services to market participants, recently extended their own hours to clear overnight trades on platforms like OTC Overnight and Blue Ocean.
Similarly, the SEC could soon require the securities information processor or “SIP” and the trade-reporting facilities (TRFs) to extend their operating hours — a project that could take years.
The developments are prompting industry experts, many of whom until recently saw overnight trading’s adoption in professional-trading circles as improbable owing to institutional investors’ paltry appetite for after-hours trading, to increasingly view the phenomenon as inevitable.
“It’s definitely going to happen within the decade, probably within the next 5 to 7 years,” FlexTrade Director of Business Development for Sell-Side Solutions Shane Remolina said last month.
Bright Future
Another positive sign for overnight trading’s future is the global scope of exchanges’ embrace of longer trading hours.
In October, for instance, the Tokyo Stock Exchange opted to extend its trading day by 30 minutes, tripling the number of earnings announcements on which traders could transact in real time in a move that could draw more volume from US-based algorithmic-trading firms to the exchange.
In fact, the ability to trade against market-moving information across regions in real time is just one lure enticing more professional traders into the overnight fray.
That opportunity has never looked so promising as it does now, with retail-trading volumes surging to levels not seen since 2021’s meme-stock craze on economic optimism stoked by Donald Trump’s election victory. Trading volumes in US stocks rose 38% year-over-year in November. Researchers at Piper Sandler expect heightened trading activity to persist into 2025 behind the strength of Fed rate cuts and a Trump administration deregulatory push.
Over the medium term, increased participation in all-hours trading by retail investors, market makers, and algorithmic traders could in turn generate sufficient liquidity to bring institutional holdouts to the table.
Even institutional investors known for trading less frequently can still benefit from the ability to trade against market-moving information like earnings releases in real time, provided overnight trading platforms offer sufficient liquidity to permit trading at scale with minimal price slippage.
Those dynamics underscore overnight trading’s potential to reshape global markets — a trend from which market participants across the spectrum, from retail investors to market makers and institutions, stand poised to benefit.
Given that promising outlook, it’s hardly surprising that broker-dealers are racing to enter overnight trading or expand their offerings. As more firms do so, breadth of coverage will take on growing import as a key differentiator.
That will encourage forays into areas like OTC securities. A similar trend is likely to unfold with trading firms tapping into diverse data streams as they scour the overnight-trading landscape in search of profit-making pockets of illiquidity, volatility, and emergent retail activity.
Against that backdrop, OTC Markets’ new MOON ATS platform and broader overnight-trading offering figure to shine brightly.