Wall Street banks prepare for round-the-clock stock trading, reluctantly. Despite the fast-approaching era of 24-hour trading in U.S. stock markets, not all of Wall Street is welcoming the transition. Several large U.S. banks are hesitant to invest heavily in the infrastructure required for nonstop trading, despite the broader market moving towards this reality in the coming year.
Equity Markets March Towards 24-hour Trading
Nasdaq, one of the largest exchanges in the world, recently filed paperwork with regulators to extend trading to 23 hours a day on weekdays. The move aligns with the growing demand from investors for greater access to U.S. capital markets. In response, regulators have introduced new rules and approved proposals from major exchanges to extend trading hours.
Wall Street’s Reluctance
While U.S. exchanges and market infrastructure firms are preparing for this transition, some significant U.S. dealers express concerns about the risks. They argue that the move would require substantial investment, with no guarantee of significant returns. Executives at major U.S. banks including JPMorgan, Bank of America, and Morgan Stanley have shared these concerns, requesting anonymity due to the sensitive nature of the topic.
Cost-Benefit Analysis
“It’s being viewed as more of a nuisance than something that will drive revenue upside for these firms,” said Patrick Moley, a senior research analyst at Piper Sandler. The cost of implementing additional technology and support capabilities is substantial, and the return on this investment is uncertain at this point.
Risk Management Concerns
Banks and broker-dealers are evaluating the costs, benefits, and risks associated with enabling round-the-clock trading. Recent discussions have highlighted concerns about managing risk around significant market-moving events. “We need to make sure that we have the right protections for risk management in place to handle events … before we really unleash this on the market,” said Sonali Theisen, global head of FICC E-Trading & Markets Strategic Investments at Bank of America.
The Debate on Liquidity
Proponents argue that 24-hour trading will allow investors, especially those based outside the U.S., to respond more quickly to news that breaks outside U.S. market hours. However, others warn that thin overnight liquidity could affect trading quality by making pricing less precise. They also question the demand for such trading.
Market Preparations for Nonstop Trading
Despite the reluctance, some Wall Street exchanges are laying the groundwork for extended hours trading. Nasdaq’s move follows the New York Stock Exchange’s proposal last year to offer trading on its Arca equities venue for 22 hours on weekdays, which received SEC approval this year. The successful rollout of round-the-clock trading by late 2026 depends largely on a significant update to the securities information processor, which displays the most accurate quotes for stocks on U.S. exchanges at the time of transactions.
Future Projections
A recent white paper by DTCC and Ernst & Young projected that 1-10% of total equity volume in the U.S. will be traded during extended hours by 2028. “I don’t think it’s a stretch to say in a couple of years we’ll be trading around the clock, and all the market participants are already coming,” said Steve Quirk, chief brokerage officer at Robinhood.
Final Thoughts
While some see the move towards round-the-clock trading as a potential multi-billion-dollar business for Wall Street, it remains to be seen how quickly this transition will take place and what its true impact will be on the market. “Will this take off in 2026? Probably not. Could it take off in 2027? Yes. Will it be a sizable market by 2028? I think so,” said Michael Masone, head of North America market structure at Citi.
