Nasdaq Aims to Revolutionize Trading with 24-Hour U.S. Equity Market
Nasdaq Inc., a leading global technology company serving the capital markets and beyond, is poised to disrupt the traditional trading landscape by introducing 24-hour trading on its flagship U.S. exchange. This ambitious plan, spearheaded by Nasdaq President Tal Cohen, aims to capitalize on the burgeoning global demand for U.S. equities and cater to an increasingly diverse and geographically dispersed investor base. The move signifies a pivotal shift in market accessibility and functionality, potentially reshaping how investors worldwide interact with the U.S. equity market.
According to a recent social media announcement by Cohen, Nasdaq anticipates launching 24-hour, five-days-a-week trading in the second half of 2026, pending regulatory approval. The exchange operator has already initiated discussions with relevant regulatory bodies to navigate the necessary compliance procedures and ensure a smooth transition to the new trading model.
The driving force behind this initiative is the significant surge in international demand for the U.S. equity market in recent years. This increased interest can be attributed to several factors, including the rising participation of retail investors, improved financial literacy levels globally, and the proliferation of user-friendly digital trading platforms. These platforms have democratized access to the market, empowering individuals across the globe to participate in the U.S. equity market with ease.
The implementation of a round-the-clock trading model promises to unlock several benefits for both investors and the exchange itself. By extending trading hours, Nasdaq can tap into global demand that is currently being served by alternative trading platforms. This move is expected to attract investors from various time zones, leading to increased trading volumes and improved market liquidity. A more liquid market typically translates to tighter spreads, reduced transaction costs, and greater efficiency for all participants.
Cohen emphasized the transformative potential of this initiative, stating that "The global growth of investor demand for U.S. equities means we stand at another pivotal moment for our markets – to broaden investor access, expand wealth-building opportunities, and redefine how markets function." This statement underscores Nasdaq’s commitment to evolving with the changing needs of the investment community and creating a more inclusive and dynamic marketplace.
Nasdaq’s move is not occurring in isolation. Rival exchanges, including Cboe Global Markets and Intercontinental Exchange, the operator of the New York Stock Exchange, are also exploring or have already implemented extended trading hours. This trend highlights a broader industry-wide recognition of the need to adapt to the demands of a globalized and interconnected investment landscape.
The introduction of 24-hour trading raises several critical considerations, particularly regarding regulatory oversight and market infrastructure. Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors, anticipates that regulatory approval will hinge on the necessary updates to securities information processors to accommodate round-the-clock markets. These processors play a crucial role in disseminating real-time market data, ensuring accurate pricing, and maintaining market integrity.
Schulman also suggests that exchanges might initially experiment with extended trading in large market-cap stocks, which tend to have greater liquidity and price stability. Furthermore, he raises the possibility of exchanges charging extra fees for extended trading, which could impact trading costs and investor behavior.
Liquidity and fair market pricing are paramount concerns in any trading environment, but they become particularly relevant in the context of 24-hour trading. Ensuring adequate liquidity across all trading hours and preventing market manipulation are critical challenges that Nasdaq and regulators must address.
A Nasdaq spokesperson has confirmed the company’s intention to file with the U.S. Securities and Exchange Commission (SEC) for the necessary approvals. The SEC will carefully scrutinize Nasdaq’s proposal, considering its potential impact on market stability, investor protection, and overall market efficiency.
While Nasdaq prepares to launch its 24-hour trading platform, some brokerages are already offering limited after-hours trading services. Charles Schwab and Robinhood, popular online brokerage platforms, currently provide their customers with the ability to trade select securities outside of regular market hours. These services offer a glimpse into the potential benefits and challenges of extended trading, providing valuable insights for Nasdaq as it prepares to launch its own 24-hour market.
The implementation of 24-hour trading by Nasdaq has the potential to significantly impact various stakeholders within the financial ecosystem. Investors will gain greater flexibility and the ability to react to market events in real-time, regardless of their geographic location. Brokerages will need to adapt their systems and processes to support round-the-clock trading, while market makers and liquidity providers will need to ensure sufficient liquidity across all trading hours.
Ultimately, the success of Nasdaq’s 24-hour trading initiative will depend on its ability to address the inherent challenges and ensure a fair, transparent, and efficient trading environment for all participants. The initiative represents a bold step towards a more globalized and accessible U.S. equity market, with the potential to reshape the future of trading. The market and regulators will keenly watch the progress and adaptions necessary to create this evolving new market structure.
