The World Federation of Exchanges (WFE), the global industry group for exchanges and clearing houses, has published a paper analysing the implications of lengthening equity market hours. It assesses both the opportunities and the operational, technological, and regulatory challenges this shift requires, especially as you get closer to round-the-clock trading.

The paper, titled “Policy and Market Impacts of Extended Trading”, traces the evolution of trading hours and presents near round-the-clock trading as a whole new model, with several issues to consider. Extended trading hours – typically 22/5 or 23/5 as opposed to 24/7 – is technologically feasible and in some cases aligns with investor demand. Nevertheless, its adoption must be carefully calibrated to preserve market integrity, investor protection, and systemic stability.

Key considerations highlighted in the paper:

• Investor demand: Local and overseas investors are seeking access beyond traditional hours. The greatest demand is currently for major US stocks during Asian hours.
• Market considerations: Extended trading may affect liquidity which should be disclosed to retail investors. Market operators should consider how to maintain market controls overnight. Markets will still likely require a closing or reference price for benchmarks, settlements, and corporate actions.
• Operational demands: Exchanges, clearing houses, and brokers must adapt systems for high availability, real-time risk controls, and continuous surveillance.
• Post-trade requirements: Market participants must adapt systems to handle 24/7 data feeds and post trade processing, strengthen supervisory frameworks, and manage risks associated with low-liquidity periods. Real-time margin recalculation and funding access outside normal banking hours are required.

The WFE concludes that:

• Extended trading is not inevitable nor universally desirable. Different markets will adopt different models depending on their liquidity, structure, and participant needs.
• It is important to consider something that is too easily forgotten: the needs and wishes of issuers of securities. 22/5 or 23/5 models offer a pragmatic path forward. They allow exchanges to meet rising demand while testing operational readiness before moving toward continuous markets.
• True 24/7 trading would represent a system-wide transformation. It requires the re-engineering of post-trade processes, governance frameworks, and supervisory oversight.
• Inaction carries risks. Regulatory inertia could cause investors to migrate to less transparent, unregulated venues, undermining market integrity and investor confidence.

Nandini Sukumar, CEO of the WFE, said, “This paper is not a prescription for 24/7 markets, but a blueprint for how to get there if markets choose to. The shift to extended trading is technologically feasible and already aligned with investor behaviour in other asset classes. The real question is how markets evolve in a way that protects investors, supports integrity, and strengthens global competitiveness. Any shift must be ecosystem-wide, coordinated across custodians, settlement banks, brokers, and regulators.”

Richard Metcalfe, Head of Regulatory Affairs, said, “Flexibility and diversity in trading models should be encouraged, with trading hours remaining the responsibility of market infrastructures. Regulators should focus on enabling innovation while maintaining the fundamental principles of fairness, transparency, and systemic stability.”

The full paper can be read here. The WFE continues to work further on this topic and will soon be publishing a research paper.

Source: WFE