By Anirban Sen
NEW YORK, Dec 16 (Reuters) – Round-the-clock trading is fast approaching U.S. stock markets, but not all of Wall Street is embracing the move.
Several of the largest U.S. banks are reluctant to push aggressively into enabling round‑the‑clock stock trading, even as equity markets are marching toward a broad rollout of nearly nonstop trading later next year and exchanges are preparing for action. Nasdaq on Monday filed paperwork with regulators to extend trading to 23 hours a day on weekdays.
The push toward nonstop weekday trading for the first time on a major global bourse comes as investors globally have clamored for greater access to U.S. capital markets in recent years, prompting regulators to introduce new rules and bless proposals from large exchanges to extend trading hours.
QUESTIONS ABOUT RISKS
While U.S. exchanges, clearinghouses, and market-plumbing firms are charting the technical path and infrastructure, some large U.S. dealers are raising questions about the risks of such a move that will require tens of billions of dollars of investment, with little guarantee of a huge payday, according to interviews with half a dozen executives at U.S. banks, including JPMorgan, Bank of America, and Morgan Stanley, who requested anonymity to discuss the matter.
“It’s being viewed as more of a nuisance than something that will drive revenue upside for these firms,” said Patrick Moley, a senior research analyst at Piper Sandler. “Banks and brokers will need to roll out additional technology and support capabilities. And at the moment, it’s difficult to know how quickly they will see a return on that investment.”
Banks and broker-dealers are evaluating the costs, benefits, and risks associated with enabling round-the-clock trading. In recent weeks, some top executives have flagged concerns about managing risk around big market-moving events.
“We need to make sure that we have the right protections for risk management in place to handle events … before we really unleash this on the market,” said Sonali Theisen, global head of FICC E-Trading & Markets Strategic Investments at Bank of America, on a recent panel discussion hosted by the U.S. Securities and Exchange Commission.
BENEFITS FOR INVESTORS OUTSIDE THE U.S.
Proponents of the move to round-the-clock trading have argued it will allow retail and institutional investors – especially those based outside the U.S. – to respond more quickly to news that breaks outside U.S. market hours. Market structure experts and executives at big banks, however, warn that the quality of trading will be affected by thin overnight liquidity, which can make pricing less precise, and question the demand.
“We’re not going to change all of our systems and all of our end-of-day processes, extend everything, and hire people to work overnight,” said Brian Suth, head of electronic trading at Evercore ISI, who said he did not currently see institutional demand for such trading.
BlackRock executives said in a white paper this year that overnight sessions are less liquid than normal market hours, which can result in wider bid-ask spreads, increased volatility, and higher trading costs.
“I don’t know that many firms are insistent upon being there Day 1. But I think in time, your hand may be forced if there is significant liquidity to interact with,” said Michael Masone, head of North America market structure at Citi, adding that Citi has started to prepare for round-the-clock trading.
EXCHANGES GET READY FOR ACTION
The largest Wall Street exchanges have started to lay the groundwork for enabling extended hours trading. Nasdaq’s move on Monday follows the New York Stock Exchange last year saying it would offer trading on its Arca equities venue for 22 hours on weekdays, a proposal that was approved by the SEC this year.
A successful rollout of round-the-clock trading in late 2026 hinges on a major update to the securities information processor that displays the most accurate quotes for stocks on U.S. exchanges at the time of such transactions. The U.S. Depository Trust and Clearing Corp., which is the primary clearing hub for U.S. stock markets, is planning to roll out nonstop stock clearing by late 2026.
In a recent white paper, DTCC and Ernst & Young projected that 1%-10% of total equity volume in the U.S. will be traded during extended hours by 2028.
LONG-TERM DEMAND SEEN
The move towards round-the-clock trading has accelerated this year, as the SEC under Chairman Paul Atkins has sought to roll back what it sees as burdensome regulations that have hampered the expansion of U.S. financial markets.
“I don’t think it’s a stretch to say in a couple of years we’ll be trading around the clock, and all the market participants are already coming,” said Steve Quirk, chief brokerage officer at Robinhood.
Stephen Berger, global head of government and regulatory policy at Citadel Securities, said the firm would meet demand for such trading.
“If there’s demand from investors … to trade outside of regular trading hours, it’s our job to be there to provide the best execution quality and the best execution experience for investors,” said Berger.
Some executives said overnight trading could eventually turn into a multi-billion-dollar business for Wall Street – even if it does not happen in the near term.
“Will this take off in 2026? Probably not. Could it take off in 2027? Yes. Will it be a sizable market by 2028? I think so,” said Masone at Citi.
(Reporting by Anirban Sen in New York, Editing by Megan Davies and Rod Nickel)
