The time scale is at least a thousand times faster than necessary for your retirement savings to be safe.

The problem of investment companies selling stupidly at 3am solves itself as they either learn or go bankrupt. And the counterparties making money off those dumb moves don't need to be 'connected'.

Makes no difference unless you are a daytrader

Milliseconds?

Any overnight mispricing is going to become an arbitrage opportunity for market makers, hedge funds, and HFT firms...whom will then compete with each other to mine that arbitrage opportunity until profits go to zero, solving the market inefficiency and mispricing problem over time (and by over time, I mean like probably the first few nights and then it stops being an issue forever).

In other words, a liquidity-based mispricing that happens consistently every night is going to quickly stop being mispriced since its so predictable.

If you're not trading overnight and there's a flash crash that corrects itself overnight... it's the people who are trading overnight taking money from each other.