The potential benefits and drawbacks of continuous trading for investors as the NYSE considers extending its trading hours to 22 hours a day.

The New York Stock Exchange, owned by , is considering extending trading hours to 22 hours a day during the week. What are the potential implications for the markets?

The Big Board declared on Friday that it was requesting permission to extend trading hours on its electronic Arca platform from 16 to 22 hours a day, with a pause between 11:30 p.m. and 1:30 a.m. ET, pending regulatory approval.

The pre-opening session for NYSA Arca is from 4:00-9:30 AM ET, while the core trading hours for both the NYSE floor and NYSE Arca are from 9:30 a.m. to 4:00 p.m. ET. Afterward, NYSE Arca has a late trading session from 4:00 p.m. to 8:00 p.m. ET.

The NASDAQ, which shares similar trading hours to the NYSE, declined to comment on the NYSE's announcement and did not disclose whether it would follow the NYSE's proposal to extend trading hours.

Is there demand for after hours trading?

The NYSE thinks so

The interest in U.S. equities among both retail and institutional investors is increasing globally, as stated by Kevin Tyrrell, head of markets at NYSE, in an interview with CNBC on Friday.

Tyrrell declined to provide specific details on the source of the demand and declined to disclose the results of a survey conducted by NYSE on expanding trading hours.

"Our 22-5 extended trading plan, which involves 22 hours a day and 5 days a week, is based on extensive market interactions and our own data and analysis, according to Tyrrell. We believe that our 22-5 extended plan is the best approach given the current levels of investor demand and the availability of market infrastructure."

The CEO of the Security Traders Association, an industry group, informed CNBC that the application appears premature because the demand for overnight and weekend exchange trading from investors is speculative.

Dmitri Galinov, a former Credit Suisse dark pool manager, holds a differing view.

He stated in a CNBC interview on Sunday that there is significant demand from overseas, specifically South Korea, Japan, and some European countries.

"Retail traders in the U.S. who work during the day often want to continue trading after the 8 p.m. cutoff."

What about institutional traders?  Do they relish trading on thin volumes?

As the volume shifts to a 24-hour curve, institutions will follow, according to the speaker.

How might listed companies feel about potentially higher volatility in their stocks during after-hours?

Galinov says most international companies would welcome expanded trading.

"If I am an international company, I would prefer to list on the NYSE because it offers trading around the clock, making it more convenient for me."

The 24X National Exchange, led by Galinov, is seeking SEC approval to operate as a fully licensed exchange that trades overnight. The exchange has recently modified its application to allow trading from 23 hours a day, five days a week.

The SEC will decide on their application for an exchange by November 29th, as stated by Galinov.

Competition for expanded trading heating up

Expanded trading hours are a way for stock exchanges to increase competition, capture more trading volume, and accommodate international traders.

Some companies offer trading opportunities during overnight hours. For instance, has a partnership with Blue Ocean Technologies, which operates an alternative trading system (ATS), enabling clients to trade stocks outside of regular trading hours. However, Blue Ocean was forced to temporarily halt trading on August 5th due to a surge in global market volatility. The trading resumed the following day.

Thin trading

Many in the investing community have long expressed reservations about expanding trading.

Dennis Kelleher, CEO of Better Markets, a nonprofit organization that advocates for financial reform, has filed briefs against extending trading hours, arguing that low volumes can result in larger bid-ask spreads, promote reckless trading at night, and give professional traders an unfair advantage over retail traders.

The use of AI, predictive analytics, and gamification on targeted apps will increase, exacerbating the problem for those who are most susceptible to trading in ways that are not in their best interests, as Kelleher explained to CNBC.

Recently, Better Markets submitted a brief opposing the use of the 24X National Exchange.

""Trading during overnight sessions on an exchange would result in more volatile and unfavorable market conditions for retail investors, as stated by Benjamin L. Schiffrin, director of securities policy at Better Markets in a letter accompanying the brief," according to Schiffrin."

Jay Woods, a former designated market maker on the NYSE and currently with Freedom Capital Markets, expressed concerns that retail traders would be trading in thin markets.

Proprietary traders are excited about the opportunity to trade against retail traders in thin volume, as Woods stated on CNBC.

Trading is heading in this direction, but is it beneficial for the market, listed companies, and retail investors? Should we pause trading when liquidity is low?

Don't expect action soon

The proposed change is "pending regulatory approval," according to the NYSE.

Tyrrell stated that the NYSE plans to submit updated rules to the Securities and Exchange Commission but did not specify a particular timeline. It is worth noting that applications for regulatory approval from the SEC usually require a response time of up to 240 days from the date of the filing.

Tyrell stated that the NYSE will require assistance from the U.S. securities information processors (SIPs) in order to implement extended trading.