Cboe's 24x5 Trading Initiative: Reshaping Liquidity and Investor Strategies in a 24/7 Market

The Cboe Global Markets' proposal to extend U.S. equities trading to a 24-hour, five-days-a-week (24x5) model on its EDGX Equities Exchange marks a pivotal shift in global financial markets. This initiative, announced in February 2025 in a Cboe press release, aims to address the growing demand from Asia-Pacific investors for access to U.S. markets during their local business hours. By enabling continuous trading from 4:00 a.m. to 8:00 p.m. ET, with plans to expand further, Cboe seeks to align U.S. markets with the "follow the sun" model of global finance. However, the implications of this shift extend beyond mere convenience. They raise critical questions about liquidity dynamics, investor behavior, and the structural resilience of markets operating without traditional boundaries.

Liquidity in a 24x5 World: Opportunities and Challenges

Extended trading hours, particularly overnight sessions, inherently alter liquidity profiles. In markets like foreign exchange (FX) and futures, where 24-hour trading is already the norm, liquidity tends to concentrate during overlapping time zones, with bid-ask spreads widening during off-peak hours due to reduced participation, as shown in a ScienceDirect study. Cboe's existing 24x5 derivatives markets-such as S&P 500 (SPX) and VIX options-offer a glimpse into this dynamic. For instance, SPX zero-day-to-expiration (0DTE) options have seen a five-fold surge in trading volume over three years, driven largely by retail investors, according to a Cboe insights post. While this suggests robust participation, liquidity metrics during overnight hours remain uneven.

Data from Cboe's EDGX platform reveals that early hours trading (4:00 a.m. to 7:00 a.m. ET) saw a 135% increase in average daily volumes between 2022 and 2024, according to a MarketsMedia article. Yet, during the "dark hours" (8:00 p.m. to 4:00 a.m. ET), liquidity dries up significantly. This is partly due to the absence of Securities Information Processors (SIPs) during these periods, which hampers price discovery and order execution, as explained in Cboe guidance. As a result, bid-ask spreads in options markets may widen during overnight trading, particularly for less liquid contracts.

Investor Strategies: Adaptation and Innovation

The transition to 24x5 trading necessitates a reevaluation of investor strategies. For retail participants, the rise of 0DTE options exemplifies this shift. These instruments, which expire at the end of the trading day, allow investors to capitalize on short-term volatility without long-term exposure. Cboe reports that 50-60% of SPX 0DTE trading volume is attributable to retail investors, many of whom use platforms like Robinhood, according to a FOW analysis. This trend reflects a broader move toward tactical, high-frequency strategies, where liquidity and timing are paramount.

Institutional investors, meanwhile, are adapting to the 24x5 model by leveraging algorithmic trading and arbitrage opportunities. For example, the lead–lag relationship between VIX futures and SPX futures has become more pronounced in extended hours, enabling hedge funds to exploit volatility differentials, as documented in a lead–lag study. Additionally, the ability to react to global macroeconomic events in real time-such as central bank announcements or geopolitical shocks-has become a competitive advantage for firms with the infrastructure to support continuous trading.

However, the 24x5 model also introduces new risks. Wider bid-ask spreads during off-peak hours may increase transaction costs, while reduced order book depth could amplify slippage for large orders. As an industry analysis notes in an MDPI paper, "The inverse relationship between order book depth and bid-ask spreads remains consistent, but the volatility of these metrics rises in extended hours." This underscores the need for robust risk management frameworks, particularly for investors operating in markets with uneven liquidity.

Regulatory and Operational Hurdles

Cboe's 24x5 initiative is contingent on regulatory approval and operational readiness. The Securities and Exchange Commission (SEC) must evaluate the proposal's alignment with market integrity and investor protection standards, a point raised in coverage by MarketsMedia. Key concerns include the adequacy of SIP coverage during overnight hours and the capacity of clearinghouses like DTCC to handle extended settlement cycles.

Moreover, the transition requires significant technological investment. Broker-dealers and asset managers must upgrade systems to support real-time data dissemination, risk monitoring, and trade execution across all hours. As Deloitte analysis highlights, "The shift to 24x5 trading demands not only technological agility but also a cultural shift in how firms perceive market hours."

Conclusion: A New Era of Market Participation

Cboe's 24x5 initiative represents more than a technical upgrade-it is a response to the globalization of capital flows and the democratization of trading. By extending access to U.S. markets, Cboe is empowering investors in Asia-Pacific and beyond to participate in real time, reshaping liquidity dynamics and strategic priorities. Yet, the success of this model hinges on addressing liquidity asymmetries, enhancing infrastructure, and ensuring regulatory alignment. As markets evolve, the 24x5 paradigm may become the new norm, redefining what it means to trade in a truly global economy.