Rakuten Securities Enhances Access to U.S. Equities
Rakuten Securities is significantly expanding its offerings by enabling pre-market and after-hours trading for U.S. stocks. This strategic move provides Japanese investors with more extensive access to American equities beyond the standard New York trading session. The expansion directly addresses a persistent challenge for investors in Asia, whose local business hours often do not align with the U.S. cash market operating times. For retail clients in Japan, U.S. equities typically commence trading late in the evening and conclude in the early morning hours. Crucial market events, such as earnings releases, macroeconomic data announcements, and corporate news, frequently occur when local markets are closed.
Rakuten states that these extended trading hours empower clients to react to market developments in real time, rather than being forced to wait for the next trading session. This capability helps to mitigate execution delays, which can have a material impact on investment outcomes, particularly during periods of high market volatility. The company's decision to extend trading hours reflects a growing demand among Japanese retail investors for more active engagement in U.S. markets. These markets continue to attract substantial global capital due to their robust liquidity, diverse sector offerings, and significant exposure to technological innovation.
Investor Takeaway
Rakuten's Strategic Alignment with 24X
Rakuten's initiative is intrinsically linked to its investment in 24X US Holdings, a fintech company dedicated to developing a nearly continuous U.S. equities exchange. The subsidiary of 24X US Holdings, known as 24X National Exchange, has secured approval to operate a trading session that spans 23 hours on weekdays. This authorization marks a significant milestone, representing the first instance of a U.S. national exchange receiving permission to trade for almost an entire day under comprehensive exchange supervision. Although trading on the 24X platform is not yet continuous, this approval signals a growing regulatory acceptance of extended-hours market structures.
For Rakuten, this investment is not primarily focused on short-term trading volume but rather on gaining early access to what could evolve into a fundamental transformation in how U.S. equities are accessed globally. By aligning its brokerage services with a trading model that operates nearly 24 hours a day, Rakuten is strategically positioning itself for a future where global retail participation in financial markets is not restricted by the conventional New York trading hours.
Broader Enhancements for Retail Traders
The expansion of trading hours is part of a comprehensive suite of product updates being rolled out by Rakuten. The company is introducing a new margin service specifically designed for beginner investors, named "Raku-Raku Shinbin." This service is tailored for customers who have no prior experience in stock trading. The leverage available through this service is capped at 1x the user's own funds, and the maximum tradable amount is limited to 5 million yen. The "Raku-Raku Shinbin" product facilitates both short selling and the reuse of funds, allowing users to engage with key trading mechanics without exposing them to excessive leverage risks.
Rakuten indicates that clients can progress to standard margin accounts as they acquire more trading experience, presenting this service as an introductory phase rather than a complete margin solution. In addition to these margin enhancements, the brokerage firm is implementing the automatic reinvestment of dividends and sale proceeds from U.S. stock transactions into U.S. dollar money market funds. This feature ensures that capital remains actively invested rather than being held idle, thereby reducing the time lag between cash settlement and reinvestment for non-U.S. investors who manage their exposure to the U.S. dollar.
Investor Takeaway
Integration of Automated Research Tools
Rakuten is complementing its enhanced trading access with automated research tools powered by BridgeWise. This sophisticated system provides in-depth analysis across a vast spectrum of over 7,100 Japanese and U.S. stocks. It processes crucial financial information, including earnings releases, regulatory filings, and financial statements, to generate comprehensive ratings, comparative analyses against industry peers, and post-earnings performance metrics. According to Rakuten's reports, users generated more than 3 million investment reports within just 24 hours of gaining access to these tools, indicating a strong demand for automated analytical capabilities alongside trading functionalities.
The research tools are seamlessly integrated across Rakuten's web, desktop, and mobile platforms, reinforcing the company's strategic objective of promoting a unified workflow for both trading and investment analysis. This integration aims to provide a cohesive and efficient experience for its users.
Considerations for Extended Trading Hours
While extended trading sessions offer clear advantages, they also present certain challenges. Liquidity in markets outside of regular trading hours is generally lower, which can lead to wider bid-ask spreads. Price movements that occur during after-hours trading may not always accurately reflect the broader market consensus, potentially introducing execution risks, especially for traders with less experience. Rakuten has not yet provided specific details on how it plans to manage execution quality during these extended periods.
The company's investment in 24X suggests a long-term conviction that exchange-level solutions, rather than relying solely on broker routing mechanisms, will be essential to support deep liquidity in markets that operate on a near-continuous basis.