Nasdaq Pushes 24/7 U.S. Equity Trading to Spur Global Access

Nasdaq is preparing to submit paperwork with the U.S. Securities and Exchange Commission to implement round-the-clock trading of stocks, aiming to meet the growing global demand for U.S. equities. The move is part of a broader trend among major exchanges to extend trading hours, with the New York Stock Exchange and Cboe Global Markets also planning similar initiatives. The proposed schedule will see the U.S. stock market operating 23 hours a day, five days a week, starting in the second half of 2026.

The new trading hours will split the day into two sessions: a day session from 9:30 a.m. to 4 p.m., and a night session from 9 p.m. to 4 a.m. the following day. The transition will begin on Sunday at 9 p.m. and end on Friday at 8 p.m. after the day session. This shift is intended to accommodate investors in different time zones, especially those outside the U.S., who will be able to trade during their own business hours.

The successful rollout of 24/7 trading depends on significant infrastructure upgrades, including the modernization of the securities information processor, which disseminates stock quotes on U.S. exchanges. Additionally, the U.S. Depository Trust and Clearing Corp. (DTCC), the central clearing hub for U.S. equities, plans to launch nonstop clearing for stocks by the end of 2026. This is a critical step in enabling continuous trading without disruptions in settlement processes.

Why the Standoff Happened

The push for round-the-clock trading reflects a growing demand from global investors, who are increasingly seeking access to U.S. markets outside traditional hours. Chuck Mack, senior vice president of North American markets at Nasdaq, noted that investors want to trade in their own time zones, which has fueled demand for 24/7 trading. Currently, many such investors rely on off-exchange trading venues and alternative trading systems to access U.S. equities during extended hours.

Supporters of the initiative argue that the shift will enhance market accessibility and liquidity. However, major Wall Street banks have expressed caution, citing concerns about lower liquidity, heightened volatility, and uncertainty over returns during extended hours. The extended trading hours have historically seen lower trading volumes, which could affect market depth and price discovery.

The move toward 24/7 trading aligns with broader technological advancements in financial markets, including the tokenization of assets. The U.S. Securities and Exchange Commission recently approved the DTCC to tokenize stocks, including the Russell 1000 index and U.S. Treasury instruments, enabling blockchain-based trading and settlement. This development is seen as a step toward continuous market access and could help bridge the gap between traditional finance and digital assets.

Nasdaq's push for 24/7 trading also reflects a response to recent regulatory scrutiny over small-cap IPOs. The exchange has proposed giving itself broader discretion to reject IPO applications even if they meet formal requirements, citing concerns over market volatility and potential manipulation. This move follows high-profile incidents involving thinly traded stocks and regulatory actions by the SEC and FINRA.

Risks to the Outlook

While the expansion of trading hours and the tokenization of assets offer new opportunities, they also present challenges. Skeptics argue that the underlying risks in lending and borrowing remain unchanged, even with new technologies. Winning over regulators and major investors will be essential for such innovations to become routine according to financial analysts.

The transition to 24/7 trading also raises questions about market integrity and investor protection. With trading occurring across multiple time zones and platforms, ensuring transparency and fairness will be crucial. Regulators will need to monitor the impact on liquidity and volatility, especially during periods of low trading activity.

What Analysts Are Watching

Analysts are closely watching how the DTCC's nonstop clearing service and Nasdaq's extended trading hours integrate with existing market infrastructure. The ability to process trades and settle transactions seamlessly will be key to the success of the new model. Additionally, the performance of tokenized assets and the adoption of blockchain-based trading systems will be monitored for signs of broader market acceptance according to industry experts.

The proposed changes to Nasdaq's IPO approval process are also under scrutiny. The ability of the exchange to assess and mitigate risks associated with small-cap IPOs will be a test of its regulatory compliance and market oversight capabilities. The SEC's response to the filing will be a critical factor in determining the timeline for implementation according to financial analysts.

As the financial landscape continues to evolve, the convergence of traditional markets and digital finance is gaining momentum. Whether through extended trading hours, tokenization, or enhanced regulatory frameworks, the U.S. equity markets are positioning themselves to meet the demands of a global, 24/7 economy.