There have been numerous headlines and many discussions in the industry around Extend Trading Hours (ETH) recently. The topic is garnering quite a bit of excitement.
The Regular Trading sessions in the US are from 9:30 AM through 4:00 PM (Eastern) with Premarket Sessions starting at 4:30 AM and Aftermarket Sessions open until 8:00 PM.
Over 90% of the trading volume is executed during the Regular Trading Hours today. With less than 10% of the market volume being traded outside of Regular Trading Hours today what is fueling the interest in expanding market hours even further?
This evolving market segment is being increasingly driven by individual investors, especially those from the Asia-Pacific region. These investors seek the ability to trade in U.S. markets, and today's technology provides them with that capability right at their fingertips. Whether based in Asia-Pacific—preferring not to trade during overnight hours—or in North America—placing orders from the comfort of their couch after a day’s work—individuals are now able to engage more easily with U.S. trading markets.
Additionally, as interest in extended hours trading grows, institutional firms are increasingly examining the potential of participating in these markets. They are exploring opportunities to offer overnight access to their Algos and are interested in being able to respond to overnight events affecting the markets.
Current Extended Hours Market Structure
There are currently several ATS’s that provide trading between 8:00 PM and 4:00 AM. These markets are characterized by lower trading volumes, wider bid-ask spreads, reduced liquidity and increased price volatility.
Regulatory Developments and Market Growth
The Securities and Exchange Commission’s (SEC) recent approvals of the NYSE-ARCA's and 24Exchange’s proposals to transition to overnight trading introduced a new mandate for Equity Data Plans.1 This mandate requires they create a mechanism to collect, consolidate, process, and disseminate quotation and transaction information continuously throughout Extended Hours Trading, equivalent to the system used during Core Trading Sessions.
This adjustment is essential for fostering growth in ETH. The enhanced market transparency will attract additional participants, enriching market depth and liquidity, which are crucial for supporting institutional trading activities.
Addressing Barriers to Growth
Regulatory Clarity:
The industry needs clear regulatory guidance on defining the conclusion of a trading day. This is particularly crucial for processing trades executed after the end of the after-hours sessions at 8:00 PM through Midnight. The industry is coalescing around an agreement that 8:00 PM is the most appropriate time for the end of the trading day. Clarity on this point will inform other decisions on points related to clearing and settlement.
Corporate Actions:
The industry must address significant considerations for corporate actions, largely influenced by the defined end of the trading day. Currently the ATS’s halt stocks with corporate actions for the overnight trading sessions. The industry is looking for support from the Securities Information Processors (SIPs) to provide corporate actions data in time to process it before the overnight trading sessions open. This will reduce the need for exchanges and ATSs to consider trading halts in these securities.
Industry Movements and Technological Adjustments
DTCC is proactively adapting to these changes. Starting in the second quarter of 2026, the NSCC will shift to a 24x5 operational model (8:00 PM Sunday to 8:00 PM Friday) and has announced corresponding updates to UTC messaging.2
Implications for Firms
To remain competitive, firms must evaluate the impact across several areas, including:
- Adjustments in trade processing, clearing and settlement timelines and processes
- Enhancements to Order Management Systems (OMS) and Execution Management Systems (EMS)
- Dissemination of necessary customer risk disclosures3
- Adaptations in the Customer Support model
- Supervision frameworks, with a focus on Best Execution
Conclusion
As regulatory and market structure issues are addressed, we anticipate substantial growth in extended hours trading. We are committed to collaborating with our clients throughout this evolution, ensuring they are well-equipped to leverage the opportunities ETH presents.
1https://www.sec.gov/files/rules/sro/nysearca/2025/34-102400.pdf
2https://www.dtcc.com/-/media/Files/pdf/2025/1/30/A9551.pdf
3https://www.finra.org/rules-guidance/rulebooks/finra-rules/2265