The Evolution of Afterhours Trading for Both US & Asian Investors & Why It Matters Today

Trading U.S. stocks is gaining worldwide appeal, particularly in the Asia-Pacific region, where Blue Ocean ATS has begun operation for a largely retail clientele. In this article, Gregory Shinnick, co-founder of Blue Ocean, explains why there is a sudden appetite to trade U.S. stocks, how it works, and a little about liquidity provision for those trading during non-peak U.S. hours.

In the last decade, the challenge of exchanging information globally has been overcome through the advancement of communication tools and specifically cloud computing. In capital markets, global investors have been direct beneficiaries of these advancements. Near-instantaneous communication coupled with resulting action (fill an order, process a financial transaction, play an online game, execute a trade, etc.) is now the benchmark. However, if no one is there to pick up the phone, receive an order, trade, or respond to electronic requests, it doesn’t matter how fast the messages are sent. This is the conundrum of time, more specifically, this is the problem with time zones.

US National Market System stocks – US stocks listed on US national securities exchanges – are investment products with global appeal. Yet, the time zone when/where most of these products are bought and sold is very inconvenient for the largest number of consumers. A core objective for Blue Ocean ATS (also known as BOATS) is to eliminate this inconvenience factor. BOATS has aligned its core operations, systems, and regulatorily-qualified personnel, to coincide with Asia’s core business hours (09:00 – 17:00 HKT) and to support the US equity trading needs of investors throughout the Asia Pacific region.

A market, at its most basic level, is comprised of buyers and sellers, but we know that buyers and sellers can take many forms: ‘makers’, ‘takers’, retail, institutional, quants, long-term investors, short-term speculators, etc. It’s not enough that BOATS is open; BOATS must attract a diverse set of participants to create a robust market. Professional liquidity providers are important contributors to price discovery and trading activity.

Blue Ocean ATS fits the needs of professional liquidity providers and allows them to leverage their global investments in people, technology, facilities, and capital. Professional liquidity providers pay for their infrastructure 24/7/365. BOATS is a venue that enables these participants to quote and trade products they know very well all while keeping them within the US trading ecosystem (pre-trade, trade, post-trade) which facilitates a seamless ‘re-entry’ to their core hours of operation.

Staying within the US trading ecosystem is a benefit not only to professional liquidity providers but also investors and issuers of US listed equity securities. Blue Ocean ATS eliminates the need for issuers to pursue cross listing, (additional listing fees and compliance obligations). Why position your stock in a higher cost and more complex environment? Electronically matching a buyer and seller is easy to do from a technical standpoint, but it’s the other 85% of the process, which market participants need to be cognizant. BOATS was designed back to front: custody, settlement, clearing, reporting, matching – the highest level of utility at the lowest cost = Blue Ocean.

Like the US equity market, the Asia Pacific equity markets have increased electronic access and added the equivalent of alternative trading systems in many of their markets. The BOATS platform fits seamlessly into the normal pattern of activity across Asia, and it will provide a well-understood, viable alternative to home market investment.

The US equity market is vibrant, innovative, and critically important. The recent introduction of exchange traded funds (ETFs) whose underlying baskets are comprised of bitcoin futures contracts is a great example. BITO and BTF are likely at the forefront of a slew of new products which will be linked to cryptocurrencies and emerging digital assets. BOATS is making these products (and those that follow) available to trade concurrent with the extended hours of the futures markets and the spot crypto/digital markets. Investors in Asia will be better informed and have increased options on how to manage their exposure to cryptocurrency: spot, futures, or derivative.

BOATS is a US regulated alternative trading system that is fully electronic, transparent, and integrated into the most efficient post-trade reporting, clearing and settlement ecosystem. Subscribers to BOATS must be US regulated broker-dealers. Non-US persons or entities can access BOATS in the same manner they access the US equity market during the US Day – via their US broker dealer(s) – interested persons should ask their broker dealer(s), “are you a Subscriber to BOATS?” Investors’ in Asia are already valued and active participants in the US equity market, and they will benefit greatly from the more convenient access to US stocks which BOATS provides.

This article first appeared on TabbForum.