is moving closer to around-the-clock stock trading, as SEC last month approved its proposal to extend its trading hours for NMS stocks and exchange-traded products. If implemented, this move could prompt other exchanges to follow suit.
Nasdaq, whose flagship eponymous exchange host some of the world’s largest technology companies, expects the expanded trading to begin on December 6, subject to regulatory approvals.
But the critical question is, when it come to round-the-clock trading how do markets determine the end of one trading day and the start of the next?
How do markets determine the end of one trading day and the start of the next?
A Tabforum article explains it should not be midnight. Stock markets around the world operate on different schedules. When it is midnight in the US, markets in Australia, Japan, and Korea are already open. But there is a brief period after the US market closes when no major exchanges are open. Japan and Korea, for example, don’t open until 10 p.m. NY time.
Given the global trading patterns, it could make sense to pause the market earlier in the evening and start the next trading day before midnight.
What SEC suggested?
The has approved a proposal by the Nasdaq to expand trading hours for NMS stocks and exchange-traded products (ETPs) from the current 16 hours a day to 23 hours a day, five days a week.
Trading will be split into two sessions — a Day Session from 4:00 AM ET to 8:00 PM ET, and a new Night Session from 9:00 PM ET to 4:00 AM ET the next day.
Trading will pause daily between 8:00 PM ET and 9:00 PM ET for maintenance, testing and processing corporate actions such as mergers, stock splits and dividends.
The trading week will commence with a Night Session on Sunday nights at 9:00 PM ET, and will end at the conclusion of the Day Session on Friday.
Why stock markets are pushing for extended trading hours?
Factors such as globalization, technology upgrades, and market demand are driving the push for longer trading hours. Noting that there’s a high demand for US stocks and investors worldwide want to trade during their own waking hours, Giang Bui, Nasdaq’s head of U.S. Equities & Exchange-Traded Products, said, as quoted by , “We definitely see that this is where the markets are moving.”
He also pointed out that the rise of crypto and decentralized finance (DeFi) has raised expectations for round-the-clock market access. In fact, “there’s a number of US brokers that already are offering overnight trading because their customers are used to trading crypto in those hours,” he added.