The old advice to steer clients away from after-hours trading – citing thin liquidity and punishing spreads is rapidly becoming a relic.
According to James St. Clair, co-founder and president of ViewTrade, the overnight session has grown so quickly that the concerns that once defined it no longer apply in the same way, at least for the largest, most actively traded names.
"This may have been the case two years ago, but with the exponential growth in the overnight session, neither is as big of an issue," St. Clair told InvestmentNews. "Spreads are tightening and the liquidity is present, especially in the larger names."
The implications for financial advisors and wealth managers are significant. As exchanges explore always-on trading and retail participation in overnight sessions surges, the industry is being asked a pointed question: adapt now, or risk shortchanging clients.
The overnight session today is predominantly a retail phenomenon, but that is changing. St. Clair said ViewTrade is seeing increasing institutional flow move into the session, a shift that gives the market more depth and signals that professional money is beginning to take the hours seriously.
"Every day we hear of new connections being made to the overnight session, primarily broker-dealers," he said. "If advisors are holding back, they are doing their clients a disservice, potentially missing market-moving events."
For advisors managing internationally diversified portfolios, this is particularly relevant. Clients in the Asia-Pacific and Middle East and North Africa regions are already trading US securities during their own business hours, creating a dynamic overnight environment that is as much about global participation as it is about American insomnia.
St. Clair acknowledged that the session carries a dual nature: while it creates genuine hedging and reaction opportunities for sophisticated users, it also generates a speculative environment among some retail participants in those overseas time zones.
"Clients in the regions that can take advantage of trading during their day – APAC and MENA regions – it is creating an environment of overnight speculation," he said. "However, the opportunity to hedge positions or react to market-moving events, before the rest of the world can react, is an opportunity."
St. Clair is direct about where the real friction lies. It is not simply a matter of markets staying open longer. The deeper challenge is whether the back-office systems that support advisory firms can handle the complexity that 24-hour markets introduce.
"This has been the biggest roadblock for some firms," he said. "The inability to sync their back offices to support local markets on a T+0 basis, as well as overnight sessions that represent trades on the following day – allocating client buying power between sessions and ensuring the accuracy of their books and records proves challenging. This does call for system overhauls and operational changes."
Settlement timing adds another wrinkle. The U.S. moved to T+1 settlement in May 2023, while the United Kingdom still operates on T+2 – a gap that creates real complexity for advisors serving clients across both markets. The upcoming shift in UK trade settlement is expected to help, St. Clair noted, but for now, the mismatch demands careful attention to client liquidity.
For long-term wealth managers whose investment philosophy is built around patient capital and disciplined rebalancing, round-the-clock trading need not mean round-the-clock activity. St. Clair sees the value for this cohort as primarily defensive rather than tactical.
"Since most advisors have a longer-term time horizon, trading 24 hours a day will most likely assist with portfolio hedging based on global events, rather than rebalancing as part of their regular account maintenance," he said.
Looking five years out, St. Clair anticipates a T+0 settlement environment in the U.S. and, potentially, globally – driven by continued advances in technology, artificial intelligence, and blockchain-based atomic settlement. The pace of change makes longer forecasts difficult, he said, but the direction of travel is clear.
His parting advice to advisors is pointed: "Advisors should prepare for a world in which clients can trade almost anytime, while making clear that availability, suitability, liquidity and advisor coverage are four different things."
That distinction – between what is technically possible and what is actually appropriate for a given client – may be the most important conversation advisors have in the years ahead. Firms that build the infrastructure and client education frameworks now will be better positioned when continuous trading becomes the default, not the exception.
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