Currently, there is a momentum toward extended or 24/51 trading in the financial securities markets. Driven by perceived increased retail and international investor interest, major exchanges, especially in the U.S., are re-evaluating the conventional boundaries of trading hours.
This paper provides a comprehensive analysis of this trend by:
- Mapping the current landscape of trading hours across 60 security exchanges, revealing significant regional variation and historical evolution in trading session design.
- Discussing exchange-led initiatives, specifically U.S. exchanges, such as the proposed extended trading hour models by NYSE Arca, Nasdaq, and Cboe Global Markets, in contrast with the European counterparts that prioritize liquidity concentration and work-life balance.
- Identifying potential frictions in post-trade infrastructure, especially settlement mismatches due to asynchronous operating windows of central securities depositories (CSDs), central counterparties (CCPs), and real-time gross settlement (RTGS) systems.
- Analyzing potential temporal misalignments using foreign exchange (FX) and Continuous Linked Settlement (CLS) case studies.
- Examining the case of cryptocurrency markets, which offer 24/7 trading but experience lower liquidity, higher volatility, and increased risk of market manipulation during off-peak hours.
Key takeaway: While around-the-clock trading may enhance market accessibility and flexibility, its effective implementation depends on deep coordination across trading, clearing, settlement, and regulatory systems. The future of continuous security trading lies not only in extending access but also in coordinating the financial market infrastructure to support it.
1 The subject of this paper is extended trading, which refers to the ability to buy and sell financial securities, such as equities, derivatives, bonds, nearly 24 hours per day. The terms around-the-clock trading, 24/5 trading, and extended trading hours are often used to describe this market trend. However, the current development in the traditional securities market is likely to result in a 22/5 or 23/5 trading week rather than a 24/5 one. In this paper, we use these terms interchangeably.