From 23/5 to 24/7: What an Always-On Equity Market Demands of Issuers and the Community

Executive summary

Our core asks

Where we are: 23/5 is built, 24/7 is not

The weekday build is almost done. Once 23/5 launches, the market will trade 115 of the week's 168 hours, and 49 of the 53 dark hours will fall between Friday 8 p.m. and Sunday 9 p.m. ET.

The build-out so far

Rules that are already set for 23/5

Volume today

Overnight trading is still small. DTCC puts it at about 1% of daily notional and projects 1% to 10% by 2028. ModernIR estimates that 91% of volume trades in regular hours, or 95% if pre-market is included. Today, most overnight flow runs through three ATSs that operate without a consolidated NBBO. That changes on December 6.

What 24/7 means

True 24/7 requires four layers to run continuously: trading venues, consolidated market data, clearing and settlement, and cash movement. From December 6, the first three will run five days a week. The fourth, cash, will not reach even six days until 2028 or 2029, and the Federal Reserve calls that expansion an interim step toward 24/7/365.

The issuer lens: a market with no close

Much of how a public company operates assumes the market will close. 23/5 makes that closed period short. 24/7 removes it. The table below shows what issuers lose at each step.

Issuers used to decide when the market heard their news. They are losing that control. Nasdaq's 2015 guidance asks issuers to release news at 4:05 p.m. rather than 4:01 so the closing price can print first. Separately, Nasdaq listing rules require 10 minutes' notice to MarketWatch between 7 a.m. and 8 p.m. For news released outside those hours, notice is due by 6:50 a.m. That schedule assumes nothing trades between 8 p.m. and 4 a.m. From December 6, that assumption is false.

Our expectation is that releases will move into the remaining quiet time: the 8 to 9 p.m. pause and the weekend. 24/7 removes both, so issuers need a new approach built on three things:

• Pre-notification. Notice obligations that apply at every hour.
• Coordinated halts. A standing news-pending halt that works across venues at any hour.
• A realistic Reg FD test. A clear view of what "broad, non-exclusionary" dissemination means when the first reaction may come from an algorithm in Singapore at 2 a.m. Eastern.

The 4 p.m. auction is the one price nearly every contract refers to: index levels, fund NAVs under Rule 22c-1, equity award valuations, TSR performance periods, M&A exchange ratios, convertible settlement and ATM pricing. Under 23/5 it survives, and the market keeps trading around it. Under 24/7 there are two choices. One is to keep a single daily reference auction at a fixed time. The other is to accept that the reference price may be days old by the time a weekend event is priced in. Issuers should push for the first option.

With limit orders only and 20% static bands, a small order at 3 a.m. can print a large move. Data vendors and news headlines report that print without context. For a mid cap with little overnight liquidity, a thin-session print can move retail margin calls, trigger stop orders and give activists a talking point. Issuers will need overnight price monitoring and a prepared response for moves that do not reflect fundamentals.

The case for 24/7 is access: non-US and retail holders can trade in their own hours. The cost is visibility. Some of that flow will reach the stock through tokenized wrappers and offshore platforms. There, the link between the token holder and the registered shareholder (voting, dividends, 13F and 13D visibility) depends on the structure of the wrapper, not on any choice the issuer made. Issuers have a direct interest in the terms on which their shares are tokenized, including whether their consent is needed.

Major challenges: the weekend is a settlement problem first

The hardest part of 24/7 is not keeping trading venues open. It is that money, collateral and back-office processes stop over the weekend. A trade can be matched on a Saturday, but nothing that settles it can move until the following week.

Three of these problems decide whether 24/7 can happen at all: weekend cash, the settlement calendar and weekend hedging. Everything else on the list can be solved with more staff, money and rulemaking. Those three need either new infrastructure or a different settlement model.

The connectivity layer was built around a reset

Almost every institutional order, fill and drop copy moves over a FIX session, and most sessions reset daily or weekly. FIX does not require that reset. Firms do it because it creates a maintenance window and limits how much history a reconnecting counterparty can ask to replay. 24/7 removes the window and leaves three open problems.

The FIX Trading Community is working on this. The protocol itself already supports continuous sessions, so the unresolved questions are operational: how far back recovery is supported, and how a counterparty learns that a session is going down. A 24/7 market needs machine-readable maintenance notices and session failover that every venue and broker supports.

The upside: moving overnight volume into lit markets

About 1% of daily notional already trades overnight, on venues with no consolidated quote. An always-on market moves that volume into a market that is consolidated, surveilled and open to everyone.

Roadmap: measure 23/5, pilot weekends, then scale

The sensible path has four phases, and each should start only when the previous one has produced evidence. The earliest realistic date for broad 24/7 trading in NMS stocks is after Fedwire and NSS move to six days in 2028 or 2029. Even then, Saturday still needs a solution.

Recommendations

The most urgent step is updating issuer rules for the night session before December 6. The most important step is agreeing that 23/5 data, not competition between venues, decides the timing of 24/7.

For the Commission (Day 2)

For exchanges, SIPs and DTCC

For issuers: before December 6