The National Securities Clearing Corporation (NSCC) is set to extend its clearing hours to accommodate extended trading, a development scheduled for the second quarter of 2026, pending necessary regulatory approvals. This strategic move aims to enhance client value by maximizing liquidity and minimizing counterparty risk. By increasing its clearing hours, NSCC will leverage its central counterparty guarantee for overnight activities that span various time zones, thus catering to global participants.
In September 2024, the first phase of this initiative was launched, allowing market centers and trading platforms to start submitting trades earlier at 1:30 AM ET, which is approximately 2.5 hours ahead of the previous schedule. The upcoming phase 2 will expand the operational hours to 24 hours a day, five days a week, commencing Sunday at 8:00 PM ET and concluding Friday at 8:00 PM ET. This change is anticipated to support the overnight trading initiatives of Alternative Trading Systems (ATS) and exchanges.
Recognizing an industry-wide desire for standardized operational hours across U.S. Exchanges and ATS providers, NSCC will collaborate with the Securities Industry and Financial Markets Association (SIFMA), regulators, and other industry stakeholders to ensure alignment and address any required changes in post-trade processes.
As the demand for near-continuous trading of U.S. equities continues to rise, extending clearing hours is perceived as a proactive response to this growing interest. This adjustment will not only back clients but also bolster the overall soundness and safety of the financial markets.
The NSCC’s leadership emphasizes the importance of reducing the time gap between trade execution and the clearing and guarantee process. By doing so, counterparty risk is minimized, which in turn enhances market stability. The efforts towards extending the clearing hours have involved collaboration with several key entities in the industry, including exchanges and trading technology platforms.
In summary, the upcoming increase in clearing hours by the NSCC is a critical step towards adapting to the evolving trading landscape. The commitment to free trading from traditional time constraints aligns with the needs of modern trading practices and international market participants, fostering a more robust and secure market environment.