The U.S. is quickly moving toward a round-the-clock financial system. In 2024, the Federal Reserve Board requested public comment on extending the operations of the Fedwire Funds Service and the National Settlement Service to 22 hours per day, seven days per week to facilitate retail instant payment services.1 Currently, Congress is considering legislation to allow financial institutions to issue payment stablecoins that would allow for round-the-clock wholesale and retail payments.2 While these modifications to the financial system are likely to occur in the near future, the first change will likely be the advent of 24-hour, 5-day per week equity trading.
The move to a round-the-clock financial system will affect all financial institutions to a greater or lesser degree. For example, institutions that directly engage in extended-hour activities will need to make sure that their operations, as well as their governance, technology, and controls framework, are sufficiently robust to appropriately manage risk and help ensure regulatory compliance in such an environment. Other financial institutions may be impacted by payment activities, market movements, and potential market disruptions that occur after normal operating hours, even if they do not engage in extended-hour activities. Therefore, all financial institutions should pay close attention to these changes.
Background
In November 2024, the SEC approved the 24X National Exchange (24X) application to operate as a national securities exchange.3 Pursuant to this approval, 24X would be allowed to engage in overnight trading, effectively operating up to 23 hours per day, 5 days per week.4 It is expected that the exchange will open the second half of 2025. The SEC is currently being petitioned by Securities Information Processors (SIP) to change from its current 9:30 a.m. to 4 p.m. Eastern Time trading day to a 24-hour, 5-day-a-week model. This article will explore several issues to consider related to this possible extension and focus on potential near-term changes in equity trading hours.
Change to 24-Hour Trading
Let us start with the SIPs, which are commercial entities that consolidate, process, and distribute real-time pricing from the exchanges to investors. Because of the critical function they provide, without SIPs, trading cannot occur. Therefore, the first step in moving to a 24-hour trading day is for the SEC to approve the new length of a trading day. In addition, the Depository Trust and Clearing Corporation (DTCC) must extend its operating day to 24 hours to ensure proper clearing. Once the SEC has received these formal requests from the SIPs, it will have 300 days to respond, so a possible extension of the trading day could be about a year away, giving everyone time to prepare.
The DTCC has recently initiated an overall modernization program. This program has enhanced DTCC’s capabilities, allowing its subsidiary, the National Securities Clearing Corporation (NSCC), to state that it will be able to increase the clearing support of extended trading hours by the second quarter of 2026.5
It should be noted that a 24-hour trading day likely would not be comprised of 24 hours of actual trading since a one-hour break is expected to occur between trading days. This one-hour break will allow for the completion of market operation processes such as publishing closing/opening prices, including the respective options. In addition, the break will be leveraged for taking in corporate action data and other needed data to start the next trading day. As of now, it appears that trading would start at 8 p.m. Eastern Time on Sunday and end at 8 p.m. Eastern Time on Friday, with a one-hour break during each 24-hour period.
Currently, it is not known which equity exchanges, other than 24X, would seek permission to move to the 24-hour, 5-day model. However, it is expected that over time, most—if not all—will pursue the request with the SEC.
A 24-hour trading model would allow market participants in other countries and those that trade on different exchanges to trade in real time and in response to market events on U.S. exchanges, i.e., tariff announcements and earnings reports for U.S.-located firms. Thus, foreign investors or traders would now have the ability to react in real time to news on U.S.-domiciled companies, no longer having to wait until 9:30 a.m. Eastern Time the next trading day. While the operational questions are being resolved, two important market questions are yet to be answered: Will there be sufficient liquidity to support 24-hour trading? And what will volatility look like in this 24-hour trading environment, particularly in the U.S. overnight hours?
Many market participants believe that the change to trading volumes will be minimal as 24-hour trading would primarily impact the retail space rather than institutional trading. However, this assumption may be short-lived and trading volumes could ratchet up quickly; only time will tell. Nonetheless, financial institutions should consider the appropriateness of their current strategies, operations, and governance structures and prepare now for the upcoming 24-hour trading model. A digital platform will become ever more important as the day extends but the time to execute becomes even shorter.
Questions Financial Institutions Should Consider in Preparation:
- What would 24-hour trading mean to your firm’s support models?
- To what extent will your firm participate in 24-hour trading?
- Will you continue to trade and close out risk by 4 p.m. Eastern Time or trade later into the evening or throughout the night?
- How could changes in market liquidity and volatility affect the firm as trading progresses into night?
- Will gaps in pricing be too wide to trade without assuming too much pricing risk?
- Are your data and technology systems prepared to respond to 24-hour trading?
- Speed of systems – Can your firm send, receive, and validate industry-shared data, i.e., corporate action data, in time for the new start of day, not only one hour away from the close?
- While many firms do have system redundancy, this will be more important than ever to have, to help ensure that real-time data backup, because resolving system issues during non-trading hours will now turn issue resolution into a one-hour requirement, increasing the importance of having a backup plug-and-play system.
- Will volumes increase to the point of impacting your firm’s systems, or the chain of systems?
- Performing systems stress testing will become critical.
- Proactively managing end-of-life system dates will be necessary.
- With the speed needed to close and reopen across the entire process, is the industry moving more toward a digital, instantaneous market, including digital currency, such as payment stablecoin?
- Is your firm’s operational resiliency ready for 24-hour trading?
- Resiliency will become increasingly important. If a system goes down, how long would it take to get it back? How would your firm keep its systems from going down in the first place?
- Building out a resiliency team will be critical to monitoring and managing real-time risks.
- Resiliency will become increasingly important. If a system goes down, how long would it take to get it back? How would your firm keep its systems from going down in the first place?
- Are your governance and controls sufficiently robust to allow risk managers to appropriately manage the full spectrum of risks associated with trading 24 hours a day over a 5-day period?
- Is your staff prepared? Human capital will become even more important as a 24-hour trading cycle may require an increase in global staffing or firms may turn to a three-shift model. In either scenario, there will likely be a need for increased staffing.
How Forvis Mazars Can Help
As you consider these questions, it’s imperative to develop a plan that will allow your organization to respond to these market changes. Forvis Mazars can assist. Our team can help you work through the strategy, risk, performance, and workforce management considerations of a sound plan. If you have any questions or need assistance, please reach out to one of our professionals.
- 1https://www.federalregister.gov/documents/2024/05/09/2024-10117/expansion-of-fedwire-funds-service-and-national-settlement-service-operating-hours
- 2https://www.congress.gov/crs-product/IN12522
- 3https://www.sec.gov/newsroom/speeches-statements/peirce-crenshaw-statement-24x-112624
- 4https://www.federalregister.gov/documents/2024/12/06/2024-28551/in-the-matter-of-the-application-of-24x-national-exchange-llc-for-registration-as-a-national
- 5“DTCC’s NSCC to Increase Clearing Hours to Support Extended Trading,” dtcc.com, March 18, 2025