Following the SEC’s approval of 23/5 equities trading on both Cboe and Nasdaq, what are your initial thoughts on the practicality of this decision? And what impact will this have on securities finance markets specifically?
The US Securities and Exchange Commission’s (SEC’s) approval of 23-hour equities trading is a logical step in the evolution of capital markets, reflecting growing global demand for access to US markets across time zones. However, the real challenge is not keeping exchanges open longer, it is ensuring the surrounding market infrastructure, including clearing, settlement, surveillance, and risk management, can support near-continuous operations.
For securities finance specifically, the impact will be potentially more significant. Longer trading hours will increase demand for more dynamic collateral management, intraday liquidity, and flexible funding models. Firms that invest in automation, real-time collateral optimisation, and follow-the-sun operating models will be better positioned to support this shift. Ultimately, extended trading hours are less about longer trading sessions and more about accelerating the transition to a more continuous, technology-enabled market infrastructure.
How ready is the industry to undertake the operational and technological overhaul this move would require by the December 2026 deadline?
The industry has made significant progress, but I would characterise readiness as uneven. Market infrastructure providers, exchanges, clearing organisations, and regulators have already established credible implementation roadmaps, and many of the foundational building blocks are in motion. However, for many broker-dealers and market participants, the real work lies in modernising operating models that were designed around a traditional market day.
Meeting the December 2026 timeline will require much more than technology upgrades. Firms need to rethink staffing models, operational resilience, surveillance, cybersecurity, liquidity management, and post-trade processes to support near-continuous operations. Many are also balancing other major regulatory and strategic initiatives, including Treasury clearing reform, T+1 adoption in global markets, and digital asset integration, which places additional pressure on investment budgets and transformation resources.
I believe the deadline is achievable by industry participants that have proactively addressed this challenge with rigor, but broader success will depend on industry-wide coordination. The firms that are already investing in automation, AI-enabled operations, and scalable post-trade infrastructure will be far better positioned than those relying on manual processes or fragmented legacy systems. Ultimately, this is less a technology project than an operating model transformation.
To venture further into the impact of this move, can you speak to me about the potential consequences to batch processing, as well as surveillance and reporting?
One of the largest operational consequences of extended trading hours is that it challenges the traditional reliance on overnight batch processing. Today, many core processes: including trade reconciliation, settlements, corporate actions, reference data updates, and risk calculations, are performed during periods when markets are closed. As trading becomes almost continuous, those processing windows begin to disappear.
Firms will increasingly need to transition from batch-based operating models to more event-driven, real-time processing. That means modernising technology architectures to support continuous data flows, automated exception management, and near real-time updates across front, middle, and back office functions.
Surveillance and regulatory reporting will undergo a similar transformation. Monitoring market abuse, best execution, trade reporting, and operational risk can no longer be concentrated around the traditional trading day. Firms will need continuous surveillance capabilities, AI-assisted monitoring to identify anomalies at scale, and follow-the-sun operational support to respond to incidents across global time zones. Ultimately, extended trading hours do not simply lengthen the day, they require firms to rethink how operations, controls, and reporting activities function in an always-on market environment.
What other challenges may present themselves to affected firms?
Liquidity fragmentation is another important consideration. While extended hours improve market access, trading activity outside traditional market hours may initially be thinner, potentially leading to wider spreads, greater price volatility, and more complex best execution obligations.
Overnight trading raises important questions around accounting treatment: trade date recognition, position and P&L reporting, valuation timing, securities financing balances, and balance sheet snapshots. Finance, operations, and risk functions will need consistent policies to determine how overnight activity is reflected in books and records while maintaining accurate regulatory and financial reporting.
Firms will also need to rethink workforce and operating models. Supporting markets across multiple time zones will require greater automation, follow-the-sun operating structures, and enhanced operational resilience. At the same time, they must ensure regulatory compliance, surveillance, and risk management remain consistent regardless of when trading occurs.
The proposal was driven both by the growth in the volume during the SEC’s existing Early Trading Session, as well as the growing demand for access to the US markets, particularly by retail investors in APAC. With this in mind, does the end justify the means in this case, and why?
I do not believe the increase in trading volumes during the existing early trading session, on its own, was significant enough to justify such a fundamental change in market structure. While it demonstrated there was incremental demand, I see it as a supporting indicator rather than the primary reason.
What has really tipped the scales is the growing global demand for access to US markets, particularly from investors in the APAC region. US equities remain the world’s deepest and most liquid capital markets, yet many international investors have historically had to trade outside their local business hours or rely on alternative trading venues. As global participation in US markets continues to grow, there is a strong commercial and strategic case for regulated exchanges to offer greater accessibility during those time zones. This example has already resulted in a wave of additional announcements by the London Stock Exchange and Hong Kong Stock Exchange to follow in the footsteps of extending trading hours.
That said, the end only justifies the means if the supporting infrastructure evolves alongside it. Extended trading hours require significant changes to operating models, clearing, settlement, surveillance, collateral management, and operational resilience. If the industry successfully modernises those capabilities, the benefits, including improved global market access, potentially better price discovery over time (when true volume arrives in the Ethereum markets), reduced reliance on alternative venues and a more competitive US market structure, will outweigh the implementation costs.
What advice can you provide firms that are preparing for this change? And what plan of action does your firm have to adapt to this new development?
My advice is to avoid planning for extended trading hours in isolation. This is one of several structural changes reshaping capital markets, alongside Treasury clearing reform, global T+1 settlement, AI-driven operations, digital asset adoption, and tokenisation. These initiatives all place increasing demands on real-time processing, collateral management, liquidity optimisation, and operational resilience. Firms that address them independently risk creating fragmented solutions and duplicative investment.
Instead, firms should undertake an enterprise-wide readiness assessment to understand where existing operating models depend on a traditional market day. That includes post-trade processing, securities finance, collateral, and liquidity management, accounting and financial reporting, surveillance, cybersecurity, regulatory reporting, and client servicing. The objective should be to build operating models that are event-driven, highly automated, and capable of supporting continuous market activity rather than simply extending existing processes.
At Capco, we are helping clients look at these developments holistically. Whether it is preparing for extended trading hours, Treasury clearing, T+1, digital asset adoption, or operating model modernisation, the common requirement is the same: building resilient, scalable infrastructure that enables firms to operate in a more connected, real-time capital markets ecosystem. Those that develop an integrated transformation strategy will be better positioned than those responding to each regulatory or market change individually.
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