Overall, despite limited oversight, this market seems reasonably healthy. More details, including a discussion of institutional details, can be found in the paper
Link: papers.ssrn.com/sol3/papers....
Nocturnal trading mainly occurs on the Blue Ocean ATS (Blue), plus Interactive Brokers ATS (IEOS). We've been told this volume is mostly retail, originating from the Asia-Pacific region
The figure below shows big growth since 2022. Many other ATSs, plus exchanges plan to enter
Have new research with Andriy Shkilko and Ingrid Werner on 24-hour trading
SSRN link: papers.ssrn.com/sol3/papers....
We document big growth in US equity trading between 8 PM and 4 AM (what we call nocturnal trading)
We consider the implications for prices and market quality
Short thread
While effective spreads during nocturnal hours are worse compared to regular hours, realized spreads (a measure of intermediation costs) are about the same or better
We also find significant price discovery between 8 PM and 4 AM, particularly for exchange-traded products
