Overnight trading, between  8pm ET and to 4am ET, Interactive Brokers has increased 446% between the beginning of 2024 and the end of July, and is now 2.5% of all US trades, according to the automated electronic broker.

Steve Sanders, executive vice president, marketing & product development at Interactive Brokers, told Markets Media that he believes the firm is the only truly global broker with clients in more than 200 countries.

“Our global client base is important because over 85% of our new clients come from outside the US,” said Sanders.

Interactive Brokers launched overnight trading in November 2022 with 24 US exchange-traded funds, and then added US stocks and ETFs in April 2023. In July 2023 the IBKR platform expanded to more than 10,000 US stocks and ETFs, and now also includes US equity index options. Clients worldwide can trade US securities nearly 24 hours a day, five days a week, in their own time zone and react immediately to market-moving news.

Sanders continued that overnight trading has been tried many times in the US, but failed due to the lack of liquidity. He argued that Interactive Brokers has an advantage because of its large client base outside the US. He added: “This endeavor has gone better than I would have expected because of our international base.”

He believes another advantage is that Interactive Brokers’ clients can access 150 market centers in 34 countries through a universal account, while complying with regulatory requirements.  The universal account allows clients to trade across multiple asset classes – stocks, options, futures, currencies, commodities, bonds, mutual funds, ETFs and crypto – from a single platform.

Expansion

Interactive Brokers has been expanding its geographical and overnight product set.  On 27 August 2024 the firm said in a statement that its clients can trade equities on Bursa Malaysia, one of the largest stock exchanges in Southeast Asia. Bursa Malaysia has a market cap of $380bn from 970 listed companies across industries, including financial services, manufacturing and oil and gas, according to Interactive Brokers. Clients could previously only trade Crude Palm Oil Futures and FTSE Bursa Malaysia KLCI Futures on the exchange. Interactive Brokers also streamlines trading through using an automatic FX conversion between the base currency selected in a client’s account and the Malaysian ringgit.

Due to the dominant position of US markets, that is the most popular market for overnight trading for Asian and European clients. However, clients have become more open-minded about trading into other markets when there are opportunities, according to Sanders, and those volumes have been growing.

In the second quarter the firm added several trading venues, including Korean derivatives trading on Deutsche Börse’s Eurex segment, Cboe European derivatives, and overnight trading in US corporate and government bonds. Interactive Brokers also launched securities lending for Swedish stocks, made its crypto offering available in the UK, and launched recurring investment in Canada.

In August the broker said in a statement that clients could access greater liquidity for global corporate bonds, European government bonds and UK gilts for up to 22 hours a day, and access Swiss Franc-denominated bonds on the IBKR platform.

In the same month Interactive Brokers also expanded its overnight trading offering to include contracts for difference (CFDs) on over 3,500 US stocks and ETFs. CFDs provide an alternative to traditional stock trading with margin, offering leveraged exposure to the US equity market without owning the underlying asset.

Milan Galik, chief executive of Interactive Brokers, said in a statement: “With the growing popularity and increase in overnight trading volumes, expanding our offerings to include CFDs on US equities is a strategic enhancement.”

Sanders added that CFDs also are not available in the US due to regulation, but are a popular product overseas.

“It would be nice to see more overnight trading of options but all US options need to be traded on an exchange,” Sanders added. “The exchanges are certainly watching what is happening in overnight trading of stocks, and based on that, they will make a decision.”

August also included the spike in volumes on Monday 5 August but Interactive Brokers said it had no outages on that day.

Interactive Brokers has its own trading venue, IBEOS Alternative Trading System (ATS), and in July 2023 also connected to the Blue Ocean ATS, which specializes in overnight trading of US stocks. The Blue Ocean ATS went down on August 5 due to the increase in volumes.

Sanders said: “Our own ATS kept running when Blue Ocean was down so we were able to service all our clients. We feel it is a really important venue given our global client base.”