Jumping hurdles or breaking barriers? The challenges of 24-hour trading in US equities markets

This content was originally published in TabbFORUM

‘The markets never sleep’ used to be a hyperbolic turn of phrase for those working in financial markets, but will this ever be true for trading stocks? There have been many attempts to lengthen trading hours in the US, but it is only in recent years that proposals have begun to gain traction. Extended hours stock trading, encompassing pre-market and after-hours trading, grown significantly, according to NYSE research. Off-hours trading volume now accounts for over 11% of all US equity trading, up from just over 5% in Q1 2019.

This increasing momentum towards non-stop trading in US equities markets suggests the attempt to extend trading hours may be different this time around. With technology on the side of the markets, the idea has the potential to go beyond hyperbole and become the new normal of modern trading. But, even if this shift occurs, one key question must not be overlooked: will 24-hour trading, in practice, benefit US markets, or will the stretch prove too high a hurdle for existing market structures?

A rising tide

The move to 24-hour trading would bring undeniable benefits to US markets. Already a key target for global investors, extending trading outside conventional hours in a single time zone will benefit US equities markets further, making them more accessible and attractive to investors around the world. Furthermore, with the rise of algo trading and automated order routing across markets, fewer orders are reliant on human intervention: automation can be used to enable higher numbers of orders to be traded without human intervention.

The allure of such benefits has recently caused a shift in favor of extended trading hours. Crypto and FX markets have already proved that non-stop trading is possible with the rise of electronic trading, and the growth of retail trading globally has added momentum. Peak net retail flows in 2023 were 85% higher than in 2019, and, according to new insights from Straits Research, the global online trading platform market size is expected to reach an estimated value of USD 11.45 billion in 2025.

Historically, major exchanges opposed the idea of extended trading hours, but the tide is turning. NYSE announced plans in October 2024 to extend weekday US equities trading to 22 hours a day, a development closely followed by the SEC’s approval of 24 Exchange’s plans to undertake overnight trading in November. Most recently, Cboe and Nasdaq submitted applications to the SEC to offer 24-hour trading in February and March 2025 respectively.

Small step or giant leap?

However, even with its growing popularity, the step from extended hours to non-stop trading must not be underestimated. 24-hour trading of equities has not yet been tried and tested, and it is likely that market infrastructure will need significant updates and adaptations to support it. If the market fails to recognize the barriers and challenges in pursuit of the seemingly boundless potential of trading capabilities, it could fall at the first hurdle.

Preparation and collaboration to adjust market structures will be key: market stakeholders must agree on how existing operational structures should be adjusted to a 24-hour environment. Settlement deadlines, dividend entitlements, and the effect of corporate actions are all built around the traditional trading day. Questions arise around Corporate Actions, which are usually applied overnight, and the clearing deadlines that should be applied for overnight trades. Structures must allow time for effective maintenance of trading systems; while most plans for “24-hour” exchanges include at least some daily downtime, infrastructure providers will be stretched to ensure consistent and reliable operations without malfunctions within these shorter periods.

The picture becomes more complex when we consider the regulatory dimension of 24-hour trading. For example, if trading firms and exchanges employ ‘offshore’ staff to handle orders in extended market hours, how will US regulators ensure that they remain compliant? And, will these staff need to be certified and registered in the same way as their US colleagues? Answers to these questions are still very much up in the air but will be vital in ensuring that trading remains fair and transparent. This is all without asking how US regulators would enforce trading rules and sanction those who violate them, and whether the potential conflict between regional regulations will leave traders unable to operate.

A technological leg up

As with crypto markets, technology will be at the heart of these adaptations. Updates to trading infrastructure will be the most immediate change for equities markets to thrive in this environment. Multi-hub solutions that support 24×5 trading can be used to address operational challenges within back-office systems, while the ability of automated trading systems to execute trades based on pre-set criteria can ensure that markets remain active and responsive when traders are not physically present. Managing technology is perhaps a more familiar environment for US regulators than the outsourcing of trading staff to fill the gaps in non-waking hours.

It is inevitable that various solutions will be proposed and debated in the months to come as market participants draw up plans to make non-stop trading a reality. Regulators, exchanges, and technology vendors will be key voices in these discussions, as mainstream markets grapple with the logistical and infrastructural challenges the move will pose. Being prepared is far more important than moving quickly, and decisions must be taken carefully by all market stakeholders. Will the phrase “the markets never sleep” finally become a reality?