Inside the Push for Longer Trading Hours: What’s at stake?
Pressure is mounting on the Securities and Exchange Commission (SEC) to approve longer trading hours – potentially moving markets towards a ‘near 24/5’ model. What would that mean for investors and banks? Geert Van Den Berghe, Brokerage Network Manager at KBC Securities Services, shares his take. “This will have significant operational implications for financial institutions worldwide.”
Geert, what do we mean by ‘extended trading hours’?
“Today, stock markets still operate within fixed trading sessions. In the US, for example, the regular session runs from 9:30 a.m. to 4:00 p.m. local time. But in today’s interconnected world, markets are global and investors operate across multiple time zones. What fits the working day in New York doesn’t necessarily fit investors in Europe, Asia or even the US West Coast. That’s why some are pushing for markets to shift to ‘near 24/5’ trading, which means markets would be open 23 hours a day, five days a week. The SEC is expected to rule on this proposal soon.
Longer trading windows are meant to give investors access during their own ‘awake hours’. They already exist in the form of ‘pre-market’ and ‘post-market’ trading: pre-market trading takes place in the hours before the official opening of the exchange, while post-market trading allows investors to continue trading for a few hours after the market has closed.”
“Crypto markets operating 24/7 have changed expectations. Investors now want the same thing from equity markets.”
Geert Van Den Berghe, Brokerage Network Manager
If pre- and post-market trading already exist, why is there pressure to go further?
“The pressure is mainly coming from the smaller, individual investor, not the large institutional players. In recent years, those retail investors have become a much larger part of the market, especially in the US.
This group wants maximum flexibility. They don’t want to be limited to a fixed window and they increasingly compare equities to what they experience in crypto. Crypto markets are available 24/7, so the question naturally follows: ‘Why can’t I trade shares the same way?’
Yet, that comparison is not entirely fair. A cryptocurrency is, in essence, a currency and currencies have been tradable around the clock for a long time in institutional markets. Equities are different. Trading a share is only the starting point: it triggers a whole chain of post-trade processes, from reporting to settlement, and that operational workload is much heavier than in crypto or other currency markets.
Still, the expectation is there. And because technology has made it increasingly feasible to offer access for longer periods, it becomes harder for the industry to simply say ‘no’.”
Are extended trading hours always beneficial for investors?
“Not necessarily. Investors should be aware that trading conditions outside the regular session are not always the same. A key reason is that most large institutional investors, such as asset managers, pension funds and large wealth managers, are typically not active outside the regular trading session. These hours simply fall outside their normal working day: their trading desks are staffed during market hours, not late at night or early in the morning.
With fewer participants, liquidity is lower, spreads can widen and execution prices may be less favourable than during the main session. So extended hours may offer flexibility, but investors should understand that they may be trading in a thinner, less liquid market environment.”
“Extended trading hours add flexibility, but not always better prices.”
Geert Van Den Berghe, Brokerage Network Manager
What would longer trading hours mean for banks and market infrastructure?
“The operational impact will be significant. Today, a lot of work happens once the market closes. Banks use the night to collect data, report on the day’s activity and prepare trades for settlement. In the United States, for example, equity trades are settled on a T+1 basis, which means that transactions have to be completed the next day.
That’s why the current proposal on the SEC’s desk is for ‘near 24/5’ trading, not 24/7: banks rely on that one hour to reset their systems and run the critical overnight processing and reporting. And even that is cutting it rather close. Some might even say ‘unrealistic’.”
How is KBC Securities Services approaching this evolution?
“We are closely monitoring the situation. A key factor will be the decision of the SEC on whether exchanges will actually be allowed to extend their trading hours further. If such a move were approved, it could have important implications for the industry. But it’s also possible that regulators take a more cautious approach.
For the moment, our focus is on following developments and evaluating what makes sense for our clients. Today, we already offer access to pre-market trading in US equities, and we are studying whether to give clients access to part of the post-market session.
So rather than making large structural changes immediately, we are carefully observing how the market and the regulatory landscape evolve.”
“We’re studying whether to give clients access to the post-market session.”
Geert Van Den Berghe, Brokerage Network Manager
