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The current industry proposal being discussed calls for standard trading hours as follows:
- Trading would occur from 8:00 p.m. ET Sunday to 8:00 p.m. ET Friday, excluding holidays.
- A one-hour technical pause would take place from 8:00 p.m. to 9:00 p.m. ET daily.
This shift marks a major transformation in how US equity markets are structured and governed. It introduces significant considerations for market participants as they assess the firmwide impacts and design global operating models across their organizations to support around-the-clock execution and processing of securities transactions. This presents implications for a broad range of matters, including:
- Adjusting business and trading strategies
- Managing risk, margin, collateral and liquidity around the clock
- Assessing market conduct and supervisory procedures
- Bolstering operational, technology and resiliency capabilities
Overall, these implications illustrate the substantial uplift required across market participant capabilities looking to support the changes at scale.
In addition to the collaborative white paper with DTCC, the EY team recently published a blog post with the Securities Industry and Financial Markets Association on extended trading hours that emphasizes ongoing industry collaboration as the target state takes shape.
What should market participants be doing now?
- Monitor industry announcements
- Regulators, exchanges, vendors and advocacy groups are all expected to contribute feedback for the final proposed target state for 24-hour trading, which will include timing and requirements for support.
- Regulators, exchanges, vendors and advocacy groups are all expected to contribute feedback for the final proposed target state for 24-hour trading, which will include timing and requirements for support.
- Participate in industry forums
- Forums and surveys continue to serve as a key tool for the broader market to assess readiness and raise key challenges.
- Forums and surveys continue to serve as a key tool for the broader market to assess readiness and raise key challenges.
- Assess firmwide readiness and establish governance
- Initiating a readiness assessment and establishing governance programs will be critical first steps for firms to understand the magnitude of the impact across functions.
- Initiating a readiness assessment and establishing governance programs will be critical first steps for firms to understand the magnitude of the impact across functions.
- Critically assess risk management capabilities
- Risk management is expected to be one of the most impacted areas of 24x5 trading. Managing credit, liquidity and operational risk across the extended hours trading cycle, as well as ensuring that risk management frameworks, limits, thresholds and liquidity management processes can support real-time executions and activity, will be critical.
- Risk management is expected to be one of the most impacted areas of 24x5 trading. Managing credit, liquidity and operational risk across the extended hours trading cycle, as well as ensuring that risk management frameworks, limits, thresholds and liquidity management processes can support real-time executions and activity, will be critical.
- Ensure holistic internal collaboration
- Extended trading hours have wide-ranging impacts that span the business, front office supervision, risk management, operations, technology and overall operating models. Having stakeholder representation across each of these areas on day one at a minimum will help accelerate change management efforts.
- Extended trading hours have wide-ranging impacts that span the business, front office supervision, risk management, operations, technology and overall operating models. Having stakeholder representation across each of these areas on day one at a minimum will help accelerate change management efforts.
In closing
While this has largely been a US-led shift, markets continue to be increasingly global in nature, which may introduce further expansion of similar 24-hour capabilities across other products/regions. As other parts of the capital markets become increasingly real-time (e.g., crypto and similar digital asset-enabled markets), investors will continue to gravitate toward trading capabilities that enable speed and efficiency as technologies advance. This introduces important questions on how technologies like stablecoins and blockchain will enable the future of capital markets as 24-hour trading takes hold, settlement cycles continue to compress and markets continuously move in real time around the clock.