SEC Approves 24X National Exchange, LLC for Overnight Trading

The U.S. Securities and Exchange Commission (SEC) has approved the registration of 24X National Exchange, LLC as a national securities exchange, paving the way for overnight trading on a lit exchange for the first time. This landmark decision introduces a significant innovation to U.S. financial markets, offering new opportunities for both domestic and international investors.

Key Highlights of the Approval

• Overnight Trading Session:
  The approval allows the Exchange to operate an overnight session, aiming to increase accessibility and convenience for global market participants.
• Investor Protection:
  The Exchange has implemented enhanced disclosure requirements to inform investors about risks specific to overnight trading, such as lower liquidity and higher volatility.
• Conditional Launch:
  The overnight trading session can commence only after the concurrent operation of the Equity Data Plans, ensuring comprehensive data availability.

Implications for Market Participants

The introduction of overnight trading raises operational and regulatory challenges. Market participants may need to address changes related to clearing, settlement, margin requirements, and compliance with Commission and FINRA rules.

While these concerns are noted, the SEC emphasized that they do not preclude approval of the Exchange’s application. The Commission is encouraging continued engagement from market participants to address these issues before overnight trading begins.

Future Considerations

To facilitate a smooth transition, the SEC has suggested holding a roundtable or opening a comment file to gather feedback on unresolved questions and operational considerations. These steps aim to ensure that the innovation aligns with the needs of the market while upholding investor protection standards.

This approval marks a milestone in the evolution of U.S. securities markets, highlighting the SEC’s commitment to fostering innovation while maintaining robust regulatory oversight.