Nasdaq’s View: The Road to 24-Hour Trading

Nasdaq made headlines earlier this year with the announcement of plans to enable 24-hour trading on the Nasdaq Stock Market.

Known as “24/5” trading due to its 24-hour market engagement five days a week – the initiative has seen widespread industry support. Now, Nasdaq is working with regulators and critical industry infrastructure providers to make it a reality.

“The global growth of investor demand for U.S. equities means we stand at another pivotal moment for our markets – to broaden investor access, expand wealth-building opportunities, and redefine how markets function,” Nasdaq President Tal Cohen wrote in a recent LinkedIn post. “While the promise of round-the-clock trading can make our markets more accessible, it also demands careful and deliberate planning. Liquidity, transparency, and integrity remain the lifeblood of vibrant markets, and any structural change must uphold these principles.”

While the financial industry broadly supports overnight trading as the future of equities, there remain several infrastructural, regulatory, and technical questions that must be addressed first.

Here are some of the most pressing considerations and next steps around the industry by its participants that will need to be addressed before a 24/5 stock market can become a reality:

1. The Exchanges

Where Are They Now?

While some Alternative Trading Systems (ATS) and retail brokerages already offer 24-hour trading, the involvement of major exchanges like Nasdaq marks a new era. This expansion enhances data offerings and encourages new participants to enter the overnight trading market, with the potential for new liquidity and volumes. As of Spring 2025, several major exchanges have announced plans to move to overnight trading.

What Still Needs to Be Done?

Before implementing these plans, exchanges must address several important considerations. For example, 24/5 implementation from Securities Information Processors (SIPs), regulatory approval, and investor protection which will require a coordinated industry effort. Others will need to be worked through by individual exchanges.

Technical Updates

Exchanges must ensure that their technology and operations updates can be implemented effectively, particularly as markets continue to see increases in volume and data, . Currently critical infrastructure providers take the downtime outside of trading hours to roll out these changes. Moving to 24-hour trading will require exchanges to decide how and when they need to make technical updates during the trading week.

Surveillance and Operational Capacity

Exchanges play a crucial role in ensuring market integrity through surveillance programs. These programs monitor trading activity to prevent manipulation, fraud, and other harmful practices. To maintain high standards of surveillance during 24-hour trading, exchanges must ensure their systems, staffing, and coordination with regulatory bodies are ready.

Corporate Actions

Listing exchanges handle corporate actions including IPOs, symbol splits, and renames among other actions. Currently, these actions are processed outside of market hours. Listing exchanges, in consultation with the industry, need to establish a plan for processing these actions during 24-hour trading before exchanges can implement their plans.

2.  The Securities Information Processors (SIPs)

Where Are They Now?

To implement the exchanges plans, the Operating Committees of the Securities Information Processors (SIPS), an SEC-mandated consortium made up of all of the exchanges that process and consolidate bid/ask quotes and trades into a single data feed, must first extend their own trading hours. In Spring 2025, the SIPs announced a plan to extend their operating hours, pending regulatory approval. The proposed plan includes operating from 8:00 pm Sundays to 8:00 pm Fridays, excluding holidays, with a technical pause during each 24-hour period.

What Still Needs to Be Done?

Before implementation, the SIPs require regulatory approval. Additionally, they must expand their processing capability to handle the extended hours and ensure that all quotes and trades, including off-exchange trades, can be disseminated during their proposed hours. The SIPs' extended trading hours will only be rolled out if clearing and settlement, trade reporting, and listing venues are prepared.

3. Clearing, Settlement, and Trade Reporting

Where Are They Now?

Clearing and settlement are critical to the success of 24-hour trading. The Depository Trust & Clearing Corporation (DTCC) and its subsidiary, the National Securities Clearing Corporation (NSCC), announced plans to increase clearing hours to support extended trading.

What Still Needs to Be Done?

Subject to regulatory review and approval, the DTCC aims to complete their implementation in Q2 2026, allowing the NSCC to operate 24 hours a day from Sunday at 8:00 pm ET to Friday at 8:00 pm ET. They began implementing their plan in Fall 2024 by enabling market centers to submit trades at 1:30 am, approximately 2.5 hours earlier than they did before.

Additionally, trade reporting is also important to many post-trade operations. Currently, the industry leading FINRA/Nasdaq Trade Reporting Facility (TRF), is only operational from 8:00 am to 8:00 pm on trading days. It may be important for TRFs, such as the FINRA/Nasdaq TRF to update in order to accommodate 24-hour trading. 

4. Regulatory Approval and Investor Protection

Where Are They Now?

Many industry participants, including exchanges and the SIPS, need to file for and receive regulatory approval from regulatory bodies such as the Securities and Exchange Commission (SEC) to implement 24-hour trading.

What Still Needs to Be Done?

The industry participants must file for these changes, and the SEC needs to review and approve before exchanges can launch extended trading hours. Beyond reviewing the filings, the SEC must also make critical decisions related to extending certain market guardrails that serve as important investor protections. Currently these trading restrictions, which include Market Wide Circuit Breakers (MWCB), Limit Up/Limit Down (LULD), and Clearly Erroneous (CE), are currently only in place during regular market hours from 9:30 am – 4:00 pm. They are currently not enforced during any post or pre trading, but if hours are expanded further overnight, the SEC may consider extending these trade halts beyond typical market hours.

Conclusion

While significant strides have been made in extending clearing and settlement periods and securing initial regulatory approvals, much work remains. The success of 24-hour trading depends on coordinated efforts among regulatory bodies, market participants, and clearing organizations to ensure all necessary safeguards are in place. Continuous adaptation and vigilance will be crucial to overcoming the challenges ahead, ultimately creating a more dynamic and globally integrated trading environment.

Follow along with news and updates on Nasdaq’s move to 24/5.