SEC Commissioner Questions 24-Hour U.S. Stock Trading Mechanism

Huoxing Finance reports that on September 17, SEC Commissioner Hester M. Peirce, speaking at the 24-Hour Stock Trading Roundtable, noted that extended trading hours are taking shape as a 23-hour, five-day trading week. Although extended-hours trading has existed for years on certain ATSs (Alternative Trading Systems), it still accounts for less than 1% of total volume on NMS (National Market System) stocks and is highly concentrated among a small number of equities. Over the past two years, both new entrants and traditional trading platforms have actively expanded their operating hours in response to domestic and international demand. On the infrastructure side, NSCC transitioned its clearing operations to a 24x5 model in June, running continuously from 8 p.m. Sunday to 8 p.m. Friday; the SEC has approved extended operating hours for SIPs (Securities Information Processors), with the new schedule set to launch on December 6; the Commission has also approved a full-market circuit breaker plan for extended hours, and trading venues have established standards for handling corporate actions. Peirce acknowledged that many market participants hold mixed feelings about this shift, viewing it as an inevitable but not entirely welcome complication, concerned about thin overnight order books, wider bid-ask spreads, increased price volatility, and compressed back-office operations, batch processing cycles, and critical IT maintenance into just one hour each night. Beyond operational challenges lie more fundamental human concerns, such as sleep—extended hours amplify worries about data source outages at 3 a.m. or social media rumors depressing stock prices while headquarters are asleep. The U.S. market is not venturing into uncharted territory and can learn from foreign markets: the foreign exchange market (operating 24/7 for decades), the cryptocurrency market (never sleeping), and overnight index options and futures markets (commonly 23/5); last week, South Korean trading platforms also announced plans to extend trading hours. Peirce raised a series of questions: What lessons can markets with continuous trading experience offer U.S. equities regarding liquidity, market making, manipulation, and cybersecurity risks? How can brokers fulfill their best execution obligations amid fragmented liquidity and wider spreads? For asset managers, is it still an acceptable fiduciary decision to avoid overnight trading when liquidity and execution costs are unfavorable? Do issuers need to change their behavior? Currently, issuers typically file documents and release material information just before or after core trading hours, and EDGAR filings submitted after 5:30 p.m. are usually not processed until the next business day—should the SEC modify its systems to ensure timely dissemination of corporate actions and material information during extended hours? Should the Commission provide guidance or relief to alleviate the burden of extended trading on issuers, particularly smaller ones?