SEC Commissioner Raises Concerns Over Extended Trading Hours in U.S. Stock Market

Hester M. Peirce, a commissioner of the U.S. Securities and Exchange Commission (SEC), has highlighted the evolving trading model of the U.S. stock market, which is moving towards a '23 hours, 5 days a week' framework for extended trading hours. Currently, overnight trading represents less than 1% of the total trading volume of National Market System (NMS) stocks and is largely concentrated in a limited number of stocks. Despite this, there has been a notable increase in the number of trading venues extending their operating hours over the past two years.

Peirce raised six critical questions regarding the implications of this shift. She inquired how the U.S. stock market could learn from the practices of established foreign exchange, cryptocurrency, and futures markets. Additionally, she expressed concerns about how brokers can meet their best execution obligations and protect retail investors when overnight liquidity is low and trading spreads widen. The commissioner also questioned whether it remains a prudent decision for asset management institutions to avoid overnight trading under such conditions.

Furthermore, Peirce addressed the potential impact of extended trading hours on the timing of financial disclosures by listed companies. She noted that filings submitted to the SEC's EDGAR system after 5:30 PM Eastern Time are typically processed the following business day, raising the need for adjustments to ensure timely information disclosure during overnight trading. Lastly, she suggested that the SEC might need to consider providing guidance or regulatory exemptions for listed companies, particularly smaller firms, in light of these changes.

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Source: KLEA News