Nasdaq has announced a significant shift in its trading operations, proposing to extend its trading hours to a 23/5 schedule. This change, outlined in a recent filing with the SEC, is designed to align more closely with the round-the-clock nature of the crypto market.
This move comes as the global demand for equities continues to rise, especially from foreign investors who find the standard hours of US trading venues less accommodating. Nasdaq acknowledges that the existing US trading hours often coincide with nighttime in Asia and other regions, prompting investors to seek alternatives, including the 24/7 crypto exchanges.
The proposed trading structure will feature two distinct sessions. The Day Session will incorporate the pre-market, core, and post-market segments, running from 04:00 to 20:00 Eastern Time. Following this, the Night Session will commence at 21:00 and conclude at 04:00 the next day. A one-hour maintenance window will be scheduled from 20:00 to 21:00, during which corporate actions and end-of-day clearing will take place.
Nasdaq aims to reclaim a portion of the order flow that has shifted towards cryptocurrency platforms by implementing this new schedule. As part of the Night Session, the exchange plans to introduce a limited range of order types and functions, effectively broadening the existing extended-hours trading framework.
Importantly, the regulatory landscape and investor protection measures during these night trading hours will differ from those in the Day Session. The Reg NMS rules will not apply outside of regular market hours, which may lead to variations in liquidity and trading spreads compared to daytime operations.
This shift aligns with a broader trend in the U.S. market infrastructure towards extended trading hours. Notably, NYSE Arca has received approval to operate for 22 hours daily, while new venues like the 24X are set to function for 23 hours a day, five days a week. Additionally, amendments are being discussed to ensure near-continuous availability of market data feeds, with plans for continuous clearing of equities anticipated by 2026.
Analysts predict that by 2028, a percentage of US equity trading volume could migrate to extended hours, contingent on evolving infrastructure and investor demand. Similar extensions are being seen in futures and commodities markets, highlighting a significant shift in trading dynamics where the lines between traditional assets and digital counterparts are increasingly blurred.
If approved by the SEC, Nasdaq will position itself as the first major U.S. stock exchange to adopt this 23/5 trading model. This strategic initiative underscores a growing recognition within traditional finance of the competitive landscape posed by cryptocurrency exchanges, as technology continues to redefine the boundaries of trading hours and asset types.
Investors and market participants are encouraged to stay informed of these developments, as they have the potential to reshape trading strategies across both traditional and digital asset markets.
