The Securities and Exchange Commission (SEC) has conditionally approved expanded trading hours for five exchanges: 24X, Cboe EDGX, MEMX, Nasdaq and NYSE Arca. The overnight session is scheduled to run from 8 p.m. to 4 a.m. Eastern time Sunday through Thursday, with a one-hour technical maintenance break from 8 p.m. to 9 p.m. Monday through Thursday.
The expansion, planned for Dec. 6, would extend exchange-based equity trading into overnight hours and reshape how broker-dealers, market infrastructure providers and other financial services companies manage activity beyond the traditional trading day.
In an analysis published by Mondaq, lawyers from WilmerHale outlined the steps firms should take to prepare for the expanded schedule, highlighting customer disclosures, trading controls, corporate actions and coordination across market infrastructure.
Market Infrastructure Must Keep Pace
Longer trading hours require market data, trade reporting and clearing systems to operate on compatible schedules. The consolidated securities information processors, known as SIPs, collect and distribute quotes and transaction information across U.S. equity markets and are scheduled to extend their hours alongside the new sessions.
The National Securities Clearing Corporation, which provides central clearing services for U.S. equity trades, has also extended its operating hours. FINRA’s trade reporting facilities are scheduled to expand their hours on Dec. 6, allowing eligible over-the-counter transactions to be reported during the overnight period.
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For broker-dealers, the transition calls for coordinated testing of market data feeds, reporting processes and post-trade systems. Firms also need to align staffing and operational procedures with the new schedule.
WilmerHale Outlines Priorities For Corporates
The law firm’s analysis identifies several areas firms should address before extended trading begins.
- Strengthen customer risk disclosures. Firms offering overnight trading should clearly explain the potential for lower liquidity, greater volatility, wider bid-ask spreads and rapid price movements. Overnight news can have a pronounced effect when fewer participants are active. Online disclosures must be presented clearly and conspicuously.
- Review trading controls and error procedures. Exchanges intend to apply their existing clearly erroneous trade rules during overnight sessions. Broker-dealers should review the applicable standards and ensure their internal procedures account for the conditions that can arise when trading activity is lighter.
- Plan for corporate-action halts. Firms should incorporate mandatory halts for specified corporate actions and issuer events into their overnight workflows. Operational teams will need processes for updating orders, quotes and reference data when affected securities resume trading.
- Coordinate technology and reporting. Firms should verify that trading systems, market data feeds and reporting processes are compatible with the expanded schedule. Testing across exchanges, clearing organizations and service providers will help identify dependencies before launch.
The industry is also continuing to assess overnight price bands and other safeguards. Experience gained as trading expands is expected to inform further recommendations on market protections.
Extended Access Brings New Responsibilities
Longer trading hours could help global investors access U.S. equities across time zones and allow market participants to react to economic releases and corporate announcements closer to when they occur.
For financial institutions, the launch represents a broader operational undertaking. Firms will need to integrate extended-hours activity into their compliance programs, customer communications and technology planning while monitoring how liquidity and volatility evolve during the overnight session.
The transition will test the ability of market infrastructure and financial firms to support a longer trading day with reliable execution, effective oversight and clear communication with customers.
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