Since Robinhood Markets and Interactive Brokers unveiled overnight trading in single stocks last year, other platforms have raced to expand their offerings. The New York Stock Exchange recently unveiled plans to extend trading on its all-electronic exchange to 22 hours a day. Charles Schwab plans to add individual stocks and hundreds of additional exchange-traded funds to its off-hours session. Webull recently expanded its 24-hour trading platform to include U.S. users, and Firstrade is launching overnight trading next year….

Most of the enthusiasm for 24-hour trading has come from amateur traders and those in Asia where market hours don’t overlap with those of the U.S.

Some institutional investors, on the other hand, have called for a shortened trading day because so much activity now takes place at the opening and closing bells…. Trading platforms say much of their off-hours activity is event-based. Blue Ocean facilitated a record $3.3 billion in trades in the off-hours session following Election Day. The trading platform typically sees about $1 billion in trades during an overnight session….

Also, bad news?

Late-night trading can expose traders to dangers, too. Thin volumes can leave markets vulnerable to sharp price swings, whereas huge volumes can lead to kinks in the platforms’ plumbing. Blue Ocean—which powers off-hours trading for Schwab and Webull, among others—saw an hourslong outage during the global markets rout in August…. Although the pandemic-era trading boom has faded, robust online communities and the rise of remote work have allowed Americans to be plugged into the market like never before.

Just what everyone needed.

Welcome to the World of 24-Hour Stock Trading [WSJ]

It’s like a modified pump and dump, because at the end of the day it will most certainly go back down.

This guy thinks so, too.

“If they are all egging each other on using a social-media platform, they are effectively engaged in a crowdsourced pump-and-dump scheme,” said Daniel Hawke, a partner at Arnold & Porter Kaye Scholer LLP.

The traders “are making no effort to conceal their apparent intent to manipulate the price of the stock,” added Mr. Hawke, a former chief of the Securities and Exchange Commission’s market abuse unit.

As Belfort’s nearly two years in prison will tell you, pump-and-dumps are illegal. So are 4.4 million Redditors about to go to jail? Uh, probably not.

“Our team is of course -- our economic team including Secretary Yellen and others -- are monitoring the situation,” [White House Press Secretary Jen] Psaki told reporters at the White House on Wednesday.

The SEC said late Wednesday that it is monitoring the “volatility in the options and equities markets” and “working with our fellow regulators to assess the situation….” Suing hundreds of defendants who likely traded in small increments probably isn’t practical for the agency, according to securities lawyers, while a case that alleged a few key individuals instigated any problematic trading could be feasible….

Some investors, though, said the trading talked about in Reddit’s WallStreetBets forum isn’t manipulative and reflects an earnest effort by individual investors to seize on opportunities that have always been available to establishment players…. “This is the ultimate triumph of the newbies over the old pros,” said Steve Sosnick, chief strategist at Interactive Brokers. “But what’s frustrating to the old pros is that they can’t engage in the sort of behavior that the newbies can do.”

Pity, because it doesn’t look like they’ll be getting any help from Congress.

“For years, the same hedge funds, private equity firms, and wealthy investors dismayed by the GameStop trades have treated the stock market like their own personal casino while everyone else pays the price,” [Sen. Elizabeth] Warren said.

“Gotta admit it’s really something to see Wall Streeters with a long history of treating our economy as a casino complain about a message board of posters also treating the market as a casino,” [Rep. Alexandria Ocasio-Cortez] tweeted…. “AOC got our backs,” read a post on the forum, along with a screenshot of Ocasio-Cortez’s Twitter thread.

[Tucker] Carlson then slammed the Wall Street establishment for crying foul on a game insiders are usually the ones playing. "That's a crime only people who work for hedge funds are allowed to manipulate the market often with the help of CNBC. Normal people are not allowed to do that already. The people in charge of our system are outraged that anyone without an official position at a hedge fund would dare manipulate the market to their benefit."

Well, those are some delightfully strange bedfellows, but if the powers that be aren’t going to do what the hedge funds pay them to do, someone else will, it seems.

TD Ameritrade said it placed restrictions on certain types of trading activity on the companies “in the interest of mitigating risk for our company and clients….” Charles Schwab said shares of GameStop could no longer be traded on margin, meaning trades cannot be placed with money borrowed from the company. And Robinhood, the trading app that has made it easier for inexperienced traders to enter the market, said it wouldn’t allow margin trading of shares of both GameStop and AMC.

GameStop Stock Surge Tests Scope of SEC’s Manipulation Rules [WSJ]
SEC ‘Monitoring’ GameStop Frenzy as Warren Pressures Regulators [Bloomberg]
Trading platforms are limiting trades of GameStop and other companies. [NYT]
AOC mocks Wall Street outrage over GameStop surge [N.Y. Post]
Progressives Slam Hedge Funds Irked By GameStop Stock Boom As SEC Says It’s Monitoring The Situation [Forbes]
Tucker slams hedge funds as he explains GameStop stock market saga [The Post Millennial]
Jordan Belfort: GameStop frenzy is a ‘modified pump and dump’ [CNN]

Whatever you think about its changes of heart, however, jumping on the Flash Boys ship was certainly good business for Interactive, which saw “dramatic growth” beginning in 2013, making Peterffy Florida’s richest man (sorry, David Tepper). Unfortunately for Interactive, the quote above comes from a FINRA press release, because there were some important parts of the firm that weren’t growing as dramatically as they should have been—certainly not as dramatically as Peterffy’s wealth.

Interactive Brokers LLC will pay $38 million in penalties to settle charges it failed to flag suspicious activity and meet anti-money laundering requirements, U.S. markets regulators said on Monday…. Widespread anti-money laundering failures… persisted for over five years, FINRA said. Interactive Brokers saw “dramatic growth” in its business from January 2013 to September 2018, becoming one of the largest electronic broker-dealers in the United States, but failed to dedicate necessary resources to properly surveil hundreds of millions of dollars in wire transfers or to reasonably investigate suspicious activity, according to FINRA.

Interactive Brokers to pay $38 million in penalties to U.S. regulators [Reuters]