Nasdaq's 24/5 Trading Proposal: Growth Engine Facing Regulatory and Liquidity Hurdles

In the wake of global market shifts and increasing demand for flexible trading hours, Nasdaq has proposed a significant restructuring of U.S. stock trading hours to 23 hours daily, five days a week. The plan would split trading into a day session from 4 a.m. to 8 p.m. ET and a night session from 9 p.m. to 4 a.m. ET, targeting SEC approval by late 2026. This move responds to growing global demand for U.S. equities, particularly from non-U.S. investors seeking time-zone flexibility, and follows similar extensions by the NYSE and Cboe during market stress. According to market analysis, Wall Street banks warn of potential lower liquidity and volatility. Competitors like the NYSE are also coordinating with clearinghouses and data providers to enable 24/5 trading by mid-2026, and critics have raised concerns about reduced liquidity and pricing efficiency during off-peak times. The proposal aligns with broader market trends toward round-the-clock trading, including crypto's 24/7 influence, and accommodates institutional and retail traders accustomed to overnight activity. The NYSE has already secured approval for extended hours, while Nasdaq's plan maintains traditional opening/closing bells and adjusts trade attribution for night-session orders.

Regulatory scrutiny remains a key hurdle, as the SEC's approval process will critically depend on DTCC's continuous clearing system upgrades and Nasdaq's demonstrated ability to handle increased activity during market stress. While the timeline reflects growing industry consensus toward 24/5 trading, the extended night session retains inherent liquidity challenges that could amplify price volatility when participation dips below traditional thresholds.

Growth Imperative and Competitive Edge

Nasdaq's push to extend trading hours reflects a direct response to surging global demand for U.S. equities, particularly from non-U.S. investors who now represent two-thirds of global market value according to Reuters. This time-zone flexibility imperative has triggered competitive pressure from rivals like NYSE and Cboe, both pursuing similar extended-hour proposals to capture international trader interest as reported by CoinDesk. The move strategically aligns with crypto markets' 24/7 trading norms that newer investors expect, creating a compelling value proposition for global access.

However, execution faces concrete hurdles. Regulatory approval remains uncertain as Nasdaq awaits SEC review, while operational adjustments to clearinghouses and data providers will require significant infrastructure upgrades by mid-2026. Liquidity fragmentation during night sessions also poses risks, potentially weakening price discovery and increasing volatility. Though NYSE secured approval faster, Nasdaq's maintenance protocols and trade attribution rules add complexity to implementation. These friction points mean the 24/5 vision could face delays or require iterative adjustments before realizing its growth potential.

Risk and Liquidity Constraints

Nasdaq's push to extend US trading hours to 23 per weekday aims to capture global investor demand and enable faster reactions to international events, particularly in APAC and EMEA regions according to Bloomberg. While proponents highlight expanded access and convenience, execution risks emerge during thinner night sessions.

Liquidity dilution and volatility spikes are key concerns. During extended hours, fewer participants often lead to erratic price movements and reduced pricing efficiency. The SEC notes that lower liquidity and heightened volatility are inherent to off-peak trading, with official closing prices still anchored to regular hours sessions. Options contracts, meanwhile, remain scarce outside standard trading windows, limiting strategic flexibility for sophisticated investors.

Sparse participation exacerbates these frictions. Night-session orders face wider bid-ask spreads and delayed executions due to fragmented liquidity pools across venues. Critics warn that thinner markets could amplify price discrepancies between US and global exchanges, especially during fast-moving news events.

The trade-off between global accessibility and market stability remains unresolved. While extended hours cater to evolving investor needs, persistent liquidity constraints and execution risks necessitate careful monitoring before implementation.

Regulatory Catalysts and Future Scenarios

Nasdaq's push for round-the-clock trading faces a critical regulatory crossroads. While the exchange aims to extend trading hours by nearly half again, the timeline hinges on uncertain SEC decisions that could reshape market mechanics.

The path isn't entirely uncharted. Nasdaq's proposal follows similar extensions by NYSE and Cboe, which required rigorous validation of clearinghouses and data providers to prevent technical breakdowns. Those approvals came with conditions: exchanges must prove infrastructure can handle 24-hour volatility without glitches as reported by Bloomberg. This precedent suggests Nasdaq could secure approval if it demonstrates mid-2026 readiness. Yet critics warn that fragmented liquidity during night sessions might trigger unintended consequences.

Separately, the SEC's recent approval of generic digital asset listing standards could accelerate structural changes. By clearing a path for commodity-based trusts like Bitcoin ETFs without case-by-case reviews according to SEC press release, the agency signaled openness to innovation. If Nasdaq's extended hours attract digital asset trading, this framework might expedite listings-but only if regulators deem existing safeguards sufficient.

One unresolved hurdle is whether the SEC could mandate bid-ask spread controls during night trading. Critics fear thinner liquidity might encourage manipulative pricing, prompting interventions that could cap profit potential. Until the SEC clarifies its stance, exchanges and market makers face uncertainty about adjusting strategies for 23-hour sessions.

For now, Nasdaq's timeline remains contingent on regulatory navigation. While the infrastructure groundwork is advancing, final approval could take months-and come with conditions that alter the business case for extended hours.