SEC Chairman Atkins Outlines Preparations for 24-Hour U.S. Equities Trading at Roundtable

Key Takeaways

• SEC Chairman Paul Atkins signaled strong support for expanding U.S.
• equities trading to 24 hours a day.
• He identified the infrastructure, price-band, and market-data preparations already underway and asked for feedback on open issues such as short selling, tokenization, and issuer obligations.
• Compliance teams should treat this as an early signal of coming operational and supervisory changes and consider engaging in the comment process.

Deep Dive

SEC Chairman Paul Atkins signaled strong support for expanding U.S. equities trading to 24 hours a day. He identified the infrastructure, price-band, and market-data preparations already underway and asked for feedback on open issues such as short selling, tokenization, and issuer obligations. Compliance teams should treat this as an early signal of coming operational and supervisory changes and consider engaging in the comment process.

Several preparations were described as underway or in place. DTCC has gone live with 23 by 5 trade-capture systems to support clearance and settlement. The industry has adopted a plan for "overnight price bands," and all trading centers active overnight would have to establish, maintain, and enforce written policies and procedures reasonably designed to prevent trades outside those bands. Work is also ongoing on Securities Information Processor (SIP) plans for overnight price dissemination. The remarks give no firm implementation dates or deadlines. The only timing is that some exchanges are moving toward 24-hour trading and that the SEC is accepting comments as it considers next steps, with instructions on the SEC website.

Open issues carry the most compliance weight. Customer-facing intermediaries must decide what services to offer overnight, and support functions such as prime brokerage and securities lending may need to expand. Firms have cited operational difficulty in obtaining locates for market making when spreads are wide. The Chairman suggested tokenization could enable real-time inventory management, reduce settlement failures, and curb abusive naked short selling, and he has asked staff to consider steps that balance a growth-friendly environment against protections from harmful behavior. Issuers were also invited to comment on how 24-hour trading affects corporate actions, disclosure of material information, and SEC filings made during EDGAR filing hours.

Recommended actions:
- Assess readiness of order management, surveillance, best execution, and Regulation SHO locate processes for overnight activity.
- Review written policies and procedures for price-band enforcement and market access controls.
- Evaluate staffing, vendor, and business continuity coverage for around-the-clock operations.
- Examine settlement, margin, and liquidity risk during extended hours.
- Coordinate with legal and investor relations on Regulation FD, material-information dissemination, and filing timing.
- Consider submitting comments through the SEC website.

Risk implications are mainly operational, market conduct, and supervisory. Thin overnight liquidity and wide spreads raise best execution, volatility, and customer disclosure concerns. Round-the-clock surveillance and short-sale controls will strain existing compliance monitoring. The SEC's emphasis on balancing investor protection with market access suggests that any future rulemaking or guidance will prioritize these areas.

Source: Securities and Exchange Commission