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24/5 Trading: What It Is, Why It's Coming, and What It Means for Your Data Stack (FactSet)

  • 1.  24/5 Trading: What It Is, Why It's Coming, and What It Means for Your Data Stack (FactSet)

    Posted 3 days ago

    Latest post from the Team @ FactSet on the developments of 24/5 Trading in the US.

    update

    Key takeaways:

    What's driving 24/5 Trading:

    1. Global investor demand: International investors-particularly in Asia and Europe-hold substantial positions in U.S. equities but have always had to wait for New York to open. 24/5 trading lets them act on earnings, macro data, and geopolitical events during their own business hours, rather than sitting on unhedged overnight risk.

    2. Retail expectations, reset by crypto: Crypto markets never close, and that has recalibrated what a generation of retail investors consider normal. The pressure to offer equivalent access for equities has been building on exchanges, brokerages, and regulators for years.

    3. Technology readiness: Electronic trading infrastructure and cloud-based platforms have matured to the point where high-volume, low-latency trading across extended sessions is operationally feasible. The argument that the systems can't support it no longer holds.

    Where Things Stand Today:

    • Individual investors can already access overnight U.S. equity trading through Alternative Trading Systems, most notably Blue Ocean ATS which operates from 8:00 p.m. to 4:00 a.m. ET. But ATS venues sit outside the consolidated tape, operate with significantly thinner liquidity, and lack the regulatory and data infrastructure of a national exchange.
    • What's coming is different in kind, not just scale. The regulatory approvals are already accumulating, with the SEC conditionally approving:   -  24X National Exchange (approved late 2024) to operate on a 23/5 basis.  -  NYSE Arca (approved February 2025) to extend weekday trading to 22 hours.  -  Nasdaq has filed to trade 23 hours a day; approval is pending.
    • Full industry implementation depends on two shared infrastructure upgrades. The DTCC's National Securities Clearing Corporation (NSCC) must move to a 24x5 clearing schedule-targeted for June 28, 2026. And the Securities Information Processors (SIPs), which deliver the consolidated tape and official NBBO, must be upgraded to run overnight-targeted for December 2026. Until the SIPs are live, there is no consolidated tape after hours.

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    #innovationcommunity
    - Todor


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    Todor Kostov
    Director
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  • 2.  RE: 24/5 Trading: What It Is, Why It's Coming, and What It Means for Your Data Stack (FactSet)

    Posted 11 hours ago

    Good update. My critique on the 24/5 scheme is that is similar to  the lack of transparency that we suffered some years ago in the dark pools. A quick comparison:

    Key opacity Issues in 24/5 Trading are enumerated next:

    1. Information Asymmetry: Large institutional news can break at 2:00 AM. If you aren't monitoring global headlines, you may be trading against participants with better real-time data.
    2. Incomplete Quote Visibility: Standard market data feeds (the "consolidated tape") do not yet fully support overnight hours. This means you might only see orders on your own broker's platform, not the total global supply and demand.
    3. Manipulation Risk: Because volume is so low overnight, small "spoofing" or "layering" orders can more easily manipulate prices. In late 2025, regulators fined firms like Velox Clearing for failing to detect such schemes in volatile stocks.
    4. Settlement Gaps: Trading happens 24/5, but clearing and settlement through the DTCC may not be fully operational for overnight hours until late 2026, creating technical "opacity" in how trades are finalized

    Apparently some platforms are increasingly adopting the next safeguards to assuage the previous concerns:

    • Real-time Surveillance: Partnering with firms like Trillium Surveyor to monitor for manipulation 24/7.
    • On-chain Data: Some venues now publish overnight data via the Pyth Network to ensure a public record of trades exists during the 8-hour window when main exchanges are "dark".

    That said none of the previous are fostered by the regulator so they are only marketing gimmicks by the same 24/5 platform promoters to draw customers.

    Fun book recommendation about execution: Flash Boys by M. Lewis

    Let's see how this develops and hope somebody else in the community specialized in trading execution can share additional insights.




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    Carlos Salas
    Portfolio Manager & Freelance Investment Research Consultant
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    Original Message


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