The SEC has initially approved the launch of the 24X National Exchange, which will support U.S. equities trading 23 hours-per-day, five days a week.
Grygo is the chief content officer for FTF & FTF News.
Are financial markets in North America ready for exchanges that operate nonstop or as close as possible to a 24-hour cycle per day?
We may find out next year as the U.S. Securities and Exchange Commission (SEC) last month issued an order approving the registration application of 24X National Exchange, LLC, which plans to operate a nearly round-the-clock trading exchange. The proposed 24X National Exchange will support the trading of U.S. securities 23 hours each day, five days a week for broker-dealers who are approved members of the new exchange. The initial approval follows a long and involved process for the exchange’s backers.
“The extended hour trading is subject to Equity Data Plans making changes that would facilitate overnight trading hours and 24X National Exchange making an additional rule filing with the SEC confirming the changes and the Exchange’s ability to comply with the Securities Exchange Act,” according to the 24X announcement. The 24X National Exchange “will be subject to the SEC’s ongoing regulatory oversight and full range of investor protections.”
If all of the SEC’s requirements are met, the new exchange will launch in two stages. The first stage will be during the second half of 2025, with the exchange operating from 4:00 AM ET to 7:00 PM ET on weekdays, officials say. There will be a one-hour break at 7 PM.
“The second stage, which will launch once the conditions noted above are met, will offer trading in U.S. equities from 8:00 PM ET on Sunday through 7:00 PM ET on Friday,” officials say. “A one-hour operational pause will occur during each trading day to accommodate routine software upgrades and functionality testing.”
The 24X National Exchange would close on U.S. market holidays in a schedule similar to the ones of NYSE and Nasdaq officials.
The initial focus of the 24X National Exchange will be the demand from Asia-Pacific markets for trading in U.S. markets and the exchange intends to offer overnight liquidity in U.S. equities, officials add.
“Traders are most at risk when the market is closed in their geographic location. 24X National Exchange will seek to alleviate this problem by facilitating around-the-clock U.S. equities trading for broker-dealers and their institutional and retail customers,” says Dmitri Galinov, founder and CEO of 24, in a prepared statement.
The 24X effort has the support of SEC Commissioners Hester M. Peirce and Caroline A. Crenshaw, who issued a joint statement on Nov. 26, that says the approval “provides for innovation in our lit markets with disclosure-based investor protection measures” that are in line with the SEC’s historical practice.
“An overnight session on a lit exchange could make trading more convenient for investors both in the U.S. and abroad. It potentially will draw more participants into our markets,” according to the statement.
Even so, Peirce and Crenshaw note that nonstop trading “raises a number of concerns and questions. Market participants will need to make operational, software, and other changes to accommodate overnight trading and may have questions on issues related to, for example, clearing, settlement, margin, and application of Commission and FINRA rules, and investor protection issues related, for example, to potentially lower liquidity and higher volatility during overnight trading,” according to the statement. “These issues should not impede our approval of the exchange’s application.”
It’s not a given that all Wall Street participants want nonstop trading and some are arguing against it. One of the most vocal opponents of the 24X National Exchange is Benjamin Schiffrin, director of securities policy at Better Markets, an investor and consumer advocacy group.
“The SEC’s approval of 24X’s application to trade 23 hours a day, five days a week, when liquidity is low and pricing is poor, will harm investors and damage markets. Overnight trading will only make the problems that already exist in our fragmented securities markets worse and introduce new risks for retail investors,” Schiffrin says via a statement in response to 24X’s application to register as a national securities exchange. “This means that, during overnight sessions, retail investors will only get the best prices in a bad market, thereby losing money if they had traded during normal business hours.”
He also argues that it is “human nature to engage in riskier behaviors at night” and financial services firms will “have an incentive to send retail investors push notifications and other prompts at a time when they might be particularly susceptible to trading inducements. And retail investors will be able to trade in the middle of the night simply by pushing a button on their phone app.”
The ease of the app technology combined with artificial intelligence could lead to “retail investors hooked on trading, with potentially serious consequences,” says Schiffrin, who adds that 24X will need to make another SEC filing to provide assurances that the new exchange will meet obligations under the Securities Exchange Act of 1934. “The SEC should take that opportunity to more carefully review 24-hour trading before giving final approval,” he says.
Schiffrin’s full statement can be found here: https://shorturl.at/ZxbMp
FTF News reached out to a media representative for 24X for a response to the concerns from Better Markets. The representative sent a statement from Galinov.
“By facilitating around-the-clock U.S. equities trading for broker-dealers and their institutional and retail customers, we will pioneer 23/5 equities trading that for the first time will be subject to the SEC’s ongoing regulatory oversight and full range of investor protections,” Galinov tells FTF News.
“Meeting the increasing interest among the global institutional and retail trader community in around-the-clock trading is why 24 Exchange built a robust platform for such trading in several FX products five years ago,” Galinov adds. “It is also why we are now building a new national exchange to offer U.S. equities trading across greatly expanded hours.”
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