Stock market splits

Ask AI · What are the core drivers behind the split of financial markets?

Article author: Prathik Desai

Article translation: Block unicorn

Preface

The clock is not a cure for latency. For decades, financial markets have been built around the speed at which existing information is transmitted. They introduced closing bells, batch settlement, and regional exchanges—reasonable in an era when information moved slowly. But all of this has changed. Capital won’t wait. Just as water always finds a crack, capital will do the same. Financial gravity pulls it toward the fastest path to obtain price information. That’s the rule of the market. Market participants won’t tolerate inefficiency forever.

That’s what I’ve been seeing over the past few weeks while observing the development of financial markets from a macro perspective.

In today’s article, I’ll help you understand what breaks the old, bundled structure of financial markets—turning it into a more efficient, unbundled structure that cuts across different venues, wraps different products, and spans different timeframes.

Changing seats

I’ve been learning finance for more than ten years. In the early stages of my studies, I always viewed traditional stock exchanges as synonymous with “the market.” For most of the time they’ve evolved, stock exchanges have been where all people and all things converge: buyers, sellers, regulators, and the technology that drives the market. There are indices that track constituent stocks, and clocks that indicate trading hours—telling everyone when they can trade and when they can’t.

But this has changed over the past few years. In fact, just within the last few weeks, we’ve already seen multiple developments that validate this shift.

On March 18, S&P Dow Jones Indices licensed the S&P 500 index to Trade[XYZ], allowing HIP-3 market deployers to launch the first and only S&P 500 perpetual derivatives contract on the Hyperliquid exchange. The S&P 500 index is the most widely watched U.S. large-cap stock index in the world, tracking 500 leading companies in the United States, covering about 80% of the total U.S. market capitalization, with a total market cap exceeding $61 trillion. The index covers at least half of the market value of global stock markets.

It’s an index with nearly 70 years of history, yet it’s listed on a market that was established only 6 months ago.

The second day after S&P announced this news, the U.S. Securities and Exchange Commission (SEC) approved Nasdaq’s application to trade and settle portions of stocks in token form. Nasdaq is one of the most active trading venues globally; its nominal trading volume is typically higher than the New York Stock Exchange (NYSE), which is the exchange with the largest market value in the world.

On March 16, Cboe Global Markets submitted a proposal to the U.S. Securities and Exchange Commission (SEC) to launch “near-24/5” U.S. stock trading. The largest operating entity behind this U.S. financial exchange said it is ready to provide around-the-clock stock trading services as early as December 2026.

But why is that? More and more people are demanding longer trading hours for U.S. stocks.

These three initiatives are jointly targeting an outdated bundled trading structure. The S&P 500 futures trading market launched by Hyperliquid’s HIP-3 challenges the decades-old convention that investors can only trade traditional indexes through traditional markets. It also makes it possible to trade one of the most widely tracked large-cap indexes globally on a 24/7 basis.

Nasdaq’s tokenized stock trading initiative targets infrastructure. It introduces a new wrapping format that allows the same stock to be traded in different ways. Previously, attempts at tokenized stocks drew criticism from the industry.

Investors are questioning whether these tokens have the same rights as the underlying shares.

But if I provide the same equity exposure through tokens on a blockchain—while not losing the voting rights and legal protections that come with the original tokenized shares—wouldn’t you accept that?

Why would you do it? What’s in it for you?

So what if you’re an investor located outside the United States and want easier access to the stock market of the world’s largest economy? And what if tokenized stocks make it easier for you to integrate them with collateral and lending systems?

When you factor in around-the-clock trading, these advantages multiply.

That’s what Cboe is attacking. Its near-24/5 trading plan (5 days per week, 24 hours per day) is designed to acknowledge that capital doesn’t wait for office hours. Traders always want to express their views immediately after receiving information. If Cboe doesn’t provide them with a market where they can express their views, traders will move to other platforms that do.

Everything I’ve said is not hypothetical, and it’s not “something that might happen sometime soon.” It’s happening—right now, as we speak.

A split future

In Hyperliquid’s HIP-3 market, the adoption of financial product unbundling is most visible—the market was only officially launched in late October 2025.

In just the past month, HIP-3 market cumulative trading volume increased by $72 billion. Previously, the cumulative trading volume for the four months before that was $78 billion.

In March, Trade[XYZ]’s perpetual markets on traditional financial instruments and stocks continued to account for 90% of HIP-3 daily trading volume. But that’s not the most interesting part.

More than half of Trade[XYZ]’s trading volume comes from the perpetual contract markets for silver, crude oil, Brent crude oil, and gold.

Hyperliquid provides a unified trading venue for spot crypto assets as well as perpetual contracts for crypto assets and traditional assets. This not only simplifies trading workflows on a unified platform, but also brings greater liquidity, a unified user interface, and tighter bid-ask spreads.

Traders still want to trade some of the largest and hottest assets—spanning commodities, public companies, large private companies, and indexes. You might want to trade silver, gold, crude oil, Tesla, Apple, Amazon, Google, indexes tracking the top 100 non-financial companies in the United States, and the S&P 500 index—all of which can be done on the Hyperliquid platform.

HIP-3 separates the ability to invest in these assets from the existing exchange infrastructure, while still tracking the underlying reference assets of their original benchmarks. So when you go long silver futures contracts on HIP-3, the underlying reference it tracks is still tied to the value of one troy ounce of silver from the Pyth data source.

Traders choose to trade silver on HIP-3 rather than on earlier platforms because HIP-3 doesn’t distinguish between U.S. and non-U.S. traders, and it doesn’t follow any specific time. Whenever traders want to express views through asset pricing, HIP-3 provides a market for them—regardless of the trader’s location or time zone.

Over the past few weeks, open interest (OI) growth on the Hyperliquid platform has been significant, which fully reflects the outcomes described above. OI measures the total value of open derivative positions. Unlike trading volume, which reflects trading activity, OI reflects trading commitment.

On March 1, open interest stood at $1.13 billion. By April 1, it doubled to $2.2 billion. This indicates that traders are confident in Hyperliquid’s perpetual contracts and are locking in capital.

These indicators suggest that when market access becomes easier and friction is reduced, traders won’t stay loyal to a specific platform or a particular asset class. They will choose any platform that can offer volatility, convenience, and liquidity.

That’s why traditional institutions such as S&P, Nasdaq, and Cboe are taking steps to acknowledge this behavior.

At least two recent events have demonstrated how important around-the-clock trading and market volatility are to traders.

In a tweet for Decentralised.Co, Saurabh wrote: “On February 28, the U.S. and Israel attacked Iran while traditional markets were closed. Within a few hours, the prices of oil-linked perpetual contracts on the Hyperliquid platform jumped by 5%, because traders were pricing in the shock in real time.”

Just two weeks after the outbreak of war, the trading volume of oil-linked perpetual contracts surged from $200 million to $6 billion in cumulative terms.

One major downside of emerging platforms is liquidity. If liquidity is insufficient, bid-ask spreads may widen, causing traders to face a pricing disadvantage that’s more severe than on other platforms.

The week before last, as U.S. President Trump negotiated “productive talks” with Iranian officials, Hyperliquid demonstrated its strong liquidity. The newly launched S&P 500 index futures based on the HIP-3 platform can precisely track the price movements of the CME E-mini S&P 500 index futures, down to the minute.

Although the on-chain perpetual contracts trade around 50–70 points lower than ES, the magnitude of price movements is quite similar.

What does this mean

For decades, traditional markets have been bundled together, controlling venue (exchanges), time (trading sessions), and products (indexes/contracts).

They chose to maintain the status quo because they failed to build the corresponding mechanisms to address inefficiencies such as time delay, trading time limitations, and regulatory constraints on non-U.S. investors. Instead, they masked these inefficiencies and wrapped them as procedural institutional arrangements intended to build “trustworthy” institutions, in order to attract investors.

People still trade and invest. It’s not because they’re foolish, or because they trusted all the talking points sold by traditional financial markets. They do it because they have no choice. This situation began to change after blockchains emerged, which gave the world on-chain markets—making trading and investing more convenient than ever.

People saw the option and seized it.

They didn’t care about changing market structure in the past, and they won’t care in the future. Whether the new structure is bundled or unbundled—it won’t matter to them. No matter whether existing institutions are willing or not, as long as traders and investors can express their views more conveniently through financial instruments, they’ll accept the new market structure. As for whether this structure comes from traditional giants like Nasdaq, Cboe, or S&P 500, or from permissionless platforms running on blockchains—it doesn’t matter.

The financial industry, as always, keeps evolving and will adopt whatever structure can narrow the gap between events occurring and price expression of those views.

Important events happen everywhere, every moment. So why should prices wait until the clock inside a glass-windowed skyscraper in New York starts ticking on Monday morning to become determined?

That’s it for today. See you in our next article.

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