London Stock Exchange Overnight Trading: Investor Guide

The London Stock Exchange has announced plans for a new extended-hours trading venue, stepping up efforts to bring retail investors back to the UK market.

The platform, called LSE 24, is expected to launch from next year as the exchange looks to appeal to a younger generation of investors increasingly drawn to cryptocurrencies and international markets that already allow trading beyond traditional hours.

The initiative could also offer a timely lift for London’s equity market, which has struggled with weak flotation activity and a string of overseas takeovers of UK-listed companies.

Here is what the LSE is planning, when the service could become available, what investors may be able to trade and the potential risks attached to longer market access.

What is LSE launching?

LSE 24 will run as a separate platform from the exchange’s Main Market, which will keep its current trading day of 8am to 4.30pm.

London Stock Exchange Group, which operates the market, said the new service is designed to give investors “greater flexibility to respond to market events, access liquidity across time zones and manage risk.”

The exchange expects LSE 24 to be ready for customer testing by the end of 2026, with a full launch likely in the first half of 2027.

What will investors be able to use LSE 24 for? 

Subject to regulatory approval, exchange-traded products (ETPs) will be the first asset class to trade on LSE 24 from next year.

ETPs are investment vehicles that are designed to mimic the performance of a financial instrument or vehicle. This could be an index, a commodity or an asset, depending on the type of ETP.

They are listed on an exchange and can be traded like shares.

The LSE said ETPs were a ‘natural starting point, given London’s established position as a leading international ETP hub and the strong global demand for products that provide efficient exposure to markets worldwide.’

About 2,600 exchange-traded products are expected to be available on LSE 24 when it launches next year.

ETP is the collective term used to describe products including exchange traded commodities, currencies or notes. The most popular ETP is the exchange traded fund (ETF), which have lower fees than traditional funds and tend to be passive funds that track a stock market index.

LSE said the next step would be to enable trading in equities on LSE 24, meaning investors could trade individual company shares out of hours if they wanted to.

Will LSE 24 really offer round-the-clock trading?

No, trading on LSE 24 will not be available 24-hours a day seven days a week.

Instead, it will operate 24 hours a day five days a week from Monday to Friday. It will not be open for business on weekends.

LSE 24 will operate from 5pm to 7.50am with a 30-minute pause between 6.30pm and 7pm to apply End of Day processes.

Trading will continue on the London Stock Exchange’s Main Market between 8am and 4.30pm.

Why is LSE doing this?

LSE is under pressure and looking to attract more investors again. 

Ordinary investors now have access to crypto and overseas markets operating round the clock, many of which have wooed younger investors who like the convenience of trading via their smartphone. 

Alex Pugh, an investment writer at Freetrade, said: ‘Retail investors have had access to overnight US markets for some time, so the LSE’s move towards 24/5 trading is partly about keeping London relevant and competitive.

‘For retail investors, the main benefit is flexibility. Being able to respond to an overnight market move or trade at a time that better suits them. But longer trading hours do not automatically mean better trading conditions.’

Exits and takeovers galore  

Exits and takeovers by foreign firms of London-listed firms have also become a growing problem for the LSE. 

A string of companies have quit London’s public markets over the past year, with relatively few opting to list in their stead. In the first half of the year, the total value of takeover bids and exits from the LSE was 27 times greater than the value of new entrants and initial public offerings. 

The average price paid by acquirers relative to companies’ share prices has hit 45 per cent, according to data from AJ Bell, highlighting the depths to which the valuations of London-listed firms have plummeted relative to overseas peers. 

Foreign buyers account for 86 per cent of total deal value, with US buyers representing half of all overseas approaches, AJ Bell added. 

Insurer Beazley was acquired by Zurich for £8.1billion at a 59.8 per cent premium, while Nuveen acquired Schroders for £9.9billion, at a 34 per cent premium. 

On Thursday, three listed businesses agreed to takeover deals, including engineering firm Rotork, which was bought by Swiss rival ABB for £4.1billion at a 73 per cent premium. 

Last week, FTSE 250-listed Easyjet agreed in principle to a £5.7billion takeover bid from Apollo, placing it at an 81 per cent premium.

Richard Hunter, head of markets at Interactive Investor, told This is Money: ‘This comes at a time when the Stock Exchange had been receiving some criticism for concentrating on its (higher profit margin) data offerings, as opposed to developing the core market function on which it was founded. 

‘Added to the current exodus of companies due either to acquisition or simply switching their listing to the US, LSEG will be hoping that this move will consolidate its move as a leading financial centre.’

He added: ‘The Stock Exchange is aiming high with this experiment, which could have been released simply by extending hours to track US markets for example, where many UK platforms are already geared up to deal with current customer demand.’ 

Tracking the US 

The launch of LSE 24 also echoes a similar push by traditional trading venues in the US. 

Nasdaq, the New York Stock Exchange and Cboe Global Markets have either launched or are planning to launch extended trading hours. The changes will be subject to regulatory approval in the US.  

Julia Hoggett, chief executive of LSE and head of digital and securities markets, of LSEG, said the launch of an out-of-hours exchange would ‘help support deeper liquidity, greater efficiency and broader participation in our markets, reinforcing London’s position as a leading global financial centre.’

Any risks for ordinary investors?

According to Pugh, out-of-hours trading could pose some risk for investors.

He said: ‘Outside the main trading session, there may be fewer buyers and sellers in the market. 

‘That can make it more expensive to trade, as the gap between the buying and selling price widens, and it can mean a single large order moves the market more sharply.

‘Retail investors may therefore get a worse price than they would during normal trading hours.’