Nasdaq's 24/7 Trading Push: Regulatory Roadblocks and Competitive Headwinds

Market demand is clearly pushing beyond traditional closing bells. After-hours activity has surged, with off-exchange trading capturing more than half of average daily U.S. equity volume on 37 days in 2024 alone according to Nasdaq's 2024 report. This massive shift highlights how trading has fundamentally evolved beyond the old 9:30 a.m. to 4:00 p.m. ET routine.

Major exchanges are racing to formalize extended operations. The SEC has cleared NYSE Arca to launch its planned 22-hour trading window (1:30 a.m. to 11:30 p.m. ET, Monday through Friday) targeted for late 2026, contingent on critical infrastructure partners like the SIP and DTCC proving ready according to Capco Intelligence. Nasdaq has announced an even more ambitious roadmap, aiming for full 24-hours-a-day, five-days-a-week trading by the second half of 2026.

However, the path to truly continuous markets faces significant hurdles. A key regulatory dependency looms: the SEC must approve near-continuous 24×5 operations proposed by SIPs, a process currently under review within a 300-day window. Furthermore, while the DTCC's UTC system is scheduled to enable 24×5 trade capture starting June 2026, the approval of SEC Rule 19c-4 amendments for SIPs remains pending. These unresolved regulatory steps are critical safeguards, ensuring public price dissemination and the National Best Bid and Offer (NBBO) integrity function correctly during overnight sessions. Until these pieces align, the full vision of uninterrupted trading remains dependent on regulatory resolution and infrastructure execution.

Regulatory Hurdles: Approval Uncertainties and Systemic Risks

The shift toward near-continuous markets faces critical regulatory and operational roadblocks. The SEC's 300-day approval window for Rule 19c-4 amendments remains unresolved, delaying final clearance for SIPs to disseminate prices during overnight sessions. Both NYSE Arca and Nasdaq target 24×5 trading by mid-2026, but only if DTCC's NSCC clearing infrastructure and SIP systems demonstrate readiness according to SIFMA analysis.

Liquidity risks intensify as pre-market activity dominates extended-hours volume. Trading between 4am–9:30am now represents 55% of all extended-session shares, a surge from just 8% in 2019. This fivefold increase since 2019 strains market-making capacity and exacerbates price volatility during thin liquidity periods. Post-market's declining share volume further concentrates risk in early morning sessions.

Operational fragility compounds these concerns. Trade reporting delays around 8am ET distort price transparency, particularly for off-exchange executions that cluster during this window. The SEC's pending rule changes leave market participants navigating fragmented supervision frameworks and unresolved trade reporting obligations. Until SIPs, DTCC, and regulators synchronize readiness, any extended-hours expansion carries heightened systemic risk.

Competitive Landscape: Rivals' Parallel Initiatives and Market Capture

That growth has already put pressure on rivals, which are moving to capture share in extended‑hours trading. The NYSE leads in pre‑market activity, with extended‑hours share volume at 55% of all after‑hours trades-a five‑fold increase since 2019 as retail participation accelerated, and daily notional value crossing $61 billion in Q4 2024 according to NYSE research. However, trade reporting delays around 8 am raise transparency concerns under SEC Rule 19c‑4. If those reporting issues persist, the NYSE's lead could wane.

Cboe is betting on volume to win share. Its EDGX exchange saw average daily volume jump 135% between 2022 and 2024 according to Cboe investor relations, fueling plans to launch 24‑hour‑a‑day, five‑day‑a‑week U.S. equities trading by 2025, pending SEC approval. The rollout will rely on real‑time market data distribution to attract global investors and could translate into higher revenue if the regulatory hurdle clears. Still, delayed approvals could stall Cboe's growth.

Nasdaq's market services segment generated $1.02 billion in 2024 revenue according to Nasdaq's Q4 2024 earnings report, but the exchange has yet to prove a viable monetization model for after‑hours trading. The absence of detailed after-hours revenue streams leaves Nasdaq's ability to capture share in extended‑hours markets uncertain. If after-hours monetization remains unproven, Nasdaq's revenue growth may slow.

Liquidity and Operational Risks: Funding Gaps and System Fragility

The push for extended trading hours introduces fresh stress tests for market infrastructure. Record ETF inflows, now swelling U.S. ETF assets above $10 trillion, mean even minor volatility during extended sessions could trigger outsized price swings and funding strains according to Nasdaq's 2024 report. Off-exchange trading already dominated over half the daily volume on nearly 40 days in 2024, highlighting how liquidity can evaporate quickly outside core sessions.

A core fragility lies in the misalignment between proposed extended trading windows and clearinghouse capabilities. Nasdaq and NYSE's plan for near-24-hour daily trading hinges on the DTCC's National Securities Clearing Corporation (NSCC) extending its operations by mid-2026 according to SIFMA analysis. However, regulatory clarity on supervision and trade reporting for this expanded timeframe remains pending, creating a dangerous gap between market access and risk management capacity. The SIP's proposed data dissemination from Sunday evening to Friday evening requires unprecedented coordination, yet liquidity management protocols for these hours are still undefined.

Nasdaq's financial exposure compounds these operational risks. Its Market Services segment, generating

$1.02 billion in annual revenue, is acutely sensitive to trading volume and volatility levels. This segment, bolstered by U.S. equity derivatives and cash equities, stands to benefit from extended hours but also bears the brunt of any fragmentation or settlement failures according to Nasdaq's Q4 2024 earnings report. While revenue growth in other areas like Financial Technology and Indexes was strong in 2024, the lack of concrete SEC approval for 24/7 platforms and unresolved clearinghouse readiness means Nasdaq's expectations for this segment remain contingent and vulnerable to regulatory delays or technical hiccups.