Nasdaq’s bid for 23‑hour trading aims to stitch Wall Street to crypto hours — what investors need to know

Nasdaq’s plan and why it matters to investors

Nasdaq (NDAQ) has asked regulators for permission to keep its markets open for 23 hours a day. The change is framed as a response to investor demand—particularly from traders used to crypto’s nonstop markets—and a way to reduce the gap between U.S. securities and digital‑asset trading. For stock investors, the proposal is important not just because it changes hours, but because it could change how prices form, how easy it is to trade at night, and who wins from those trades.

The filing, filed under a formal rule change, would extend trading far beyond the current U.S. limits and bring Nasdaq closer to the always‑on rhythm of crypto exchanges. That matters for firms with big crypto exposure, such as Coinbase (COIN), and for ETFs and strategy stocks tied to digital assets. It also matters for market operators and market‑making firms that would have to staff, price and manage risk for a much longer portion of each day.

What near‑continuous trading would do to liquidity, spreads and price discovery

Trading hours are not just a clock. They shape where liquidity sits, how wide the bid‑ask spread is, and how fast prices respond to news. When the market is open longer, some of those patterns change in predictable ways — and some do not.

First, liquidity is likely to be patchy. During regular U.S. trading hours, many investors and market‑makers provide dense, competitive quotes that keep spreads tight. Overnight, fewer participants show up. Extending trading to 23 hours does not mean all those players will commit capital for the whole night. The result: thin order books at many times, and a real risk of wide spreads and sudden price moves if any large order hits the market.

Second, volatility could look different. Rather than one big gap between yesterday’s close and today’s open, you may see more frequent small moves spread across a longer calendar. That sounds smoother, but it can hide sudden liquidity shocks. A single news item released while the market is thin may create a rapid, outsized price swing. For active traders this can mean new opportunities; for many retail investors it means paying more for immediate execution or getting filled at unexpected prices.

Third, price discovery will shift toward the overnight period. Much of the world’s market activity happens outside U.S. business hours. Crypto markets already trade 24/7 and often price moves there spill over into U.S. listings. If Nasdaq opens for 23 hours, prices for crypto‑linked stocks and ETFs will be able to follow international and crypto moves in closer to real time. That can reduce large opening gaps after news, but it also makes the market more tied to events happening in different time zones and venues outside traditional U.S. supervision.

Fourth, cross‑venue arbitrage will get more complex but more active. Traders who monitor both crypto exchanges and U.S. securities venues will find more chances to profit from price differences. That could help align prices across markets faster, but it also puts pressure on exchanges to improve speed, connectivity and surveillance to spot manipulative behavior that plays across trading systems.

Who stands to gain and who might lose in a 23‑hour market

Some names look like natural beneficiaries. Nasdaq itself (NDAQ) would likely pick up extra fee income and a chance to be the go‑to venue for trades that bridge crypto and equities. Coinbase (COIN), which lists on Nasdaq and whose business is closely tied to crypto flows, could see better alignment between its underlying crypto prices and its listed stock price. For large asset managers active in crypto ETFs, being able to trade U.S. ETF shares when underlying spot crypto moves would reduce tracking error and make ETF shares more useful to global investors.

Market‑making firms that can staff desks around the clock are well placed, because they capture spreads and arbitrage opportunities when liquidity is thin. Public market‑maker Virtu (VIRT) and other liquidity providers could increase revenues, though they will also face higher costs for overnight staffing and hedging.

Retail brokers and smaller funds may be on the losing side unless they invest in systems and risk controls for extended hours. Individual investors trading at night could face wider spreads, inconsistent depths, and larger execution slippage. That is especially true for less liquid securities — small crypto‑related stocks, new listings, or thinly traded ETFs.

Regulatory and operational hurdles Nasdaq must clear

Nasdaq’s filing — lodged under a formal rule‑change number — makes the technical case for extended hours, but regulators will look closely at surveillance, market stability and investor protection. The U.S. regulator will want to know how Nasdaq plans to detect manipulation when trades can hop between crypto venues and traditional exchanges, and when liquidity is thinner for long stretches.

Surveillance is harder when the counterpart markets operate on different rules and timeframes. Crypto venues are global and often lack the trade reporting and centralized controls exchanges rely on. Nasdaq will have to explain how it will monitor cross‑market activity, share information with other venues and escalate suspicious patterns quickly enough to stop harm.

Operationally, the exchange must ensure its systems can handle extended runs without interruption. That includes matching engines, risk‑management throttles, order‑type behavior outside standard hours, and the infrastructure for clearing and settlement. Clearing houses may set different margin requirements for extended‑hour trades to cover overnight risk. Firms will want clarity on how trade date, settlement cycles and corporate actions are handled when trading spans multiple calendar days.

Finally, regulators will consider fairness. If extended hours benefit large, well‑connected market makers and institutional arbitrage desks more than ordinary investors, the argument for change will be weaker. Expect the review to test whether Nasdaq’s proposals meaningfully reduce harm and not just shift it to less sophisticated participants.

Practical steps investors should take if 23‑hour trading arrives

If Nasdaq clears the change, investors will face a new trade environment. Here are straightforward steps traders and buy‑and‑hold investors should consider.

First, rethink order types. Market orders at night are riskier because thin books and wide spreads can produce bad fills. Limit orders give control over execution price, and stop‑limits reduce the chance of being filled at an extreme price. Investors who need guaranteed execution should be ready to trade during the thickest liquidity windows.

Second, watch liquidity, not just price. Look at quoted size and recent trade prints before sending large orders. For less liquid securities, split large trades into smaller pieces or use algorithms that work across the day to avoid moving the market.

Third, expect different margin behavior. Brokers and clearing firms may raise margin requirements for overnight exposure. That will make leveraged positions more expensive and could force forced liquidations if accounts aren’t topped up. Investors using margin should budget for that possibility.

Fourth, adjust risk controls. Automated stops, position limits and time‑based rules can help prevent a small overnight event from creating outsized losses. If you are a long‑term investor, remember that the value of a slow, patient strategy doesn’t change just because trading hours expand — but your temptation to react will rise if prices float more overnight.

Fifth, consider tax and administrative consequences. Trade timing affects record‑keeping and reporting. Brokerage statements and year‑end summaries may change format as firms adapt to extended trade windows. While the tax day generally follows the trade date, investors should note that settlement timing and wash‑sale rules could become more awkward when trades happen across a single company’s extended session.

In short, a 23‑hour Nasdaq would bring merits and risks. It could tighten the tie between crypto markets and U.S. securities, help institutional traders and boost fees for the exchange and market makers. But it will also create patchy liquidity, pose surveillance headaches and raise real execution risks for everyday investors. The change is not a simple upgrade to convenience — it reshapes the plumbing of price discovery. For investors, the right response is not to jump in or stay out automatically, but to adjust how you trade: use limit orders, watch liquidity, and accept that overnight price moves can be both faster and costlier than before.

Sources

• x.com
• linkedin.com
• listingcenter.nasdaq.com
• coindesk.com
• coindesk.com
• coindesk.com