24X Says requested SIP exemption won't break the market

In a new letter to the US Securities and Exchange Commission, 24X National Exchange argues that its proposed early entry into overnight trading would benefit a market where investor interest is already growing.

"In light of the unexpected delays by the Equity Data Plans, the growing interest in overnight trading since the approval of 24X's Form 1 a year and half ago, and the availability of alternative consolidated data in the overnight market, the existing 24X Rules should not preclude the SEC from taking an alternative, temporary regulatory approach to facilitate overnight trading by approving the Application," general counsel David Sassoon wrote in the letter.

The filing is the latest step in 24X's effort to offer overnight trading before the securities information processors, or SIPs, expand their hours in December. Sources told WatersTechnology that the exchange intends to launch its 24X Market Session in July if the SEC approves the exemption.

The SEC has previously stated that before 24X can offer the 24X Market Session, it must file a proposed rule change under Section 19(b) of the Exchange Act. That filing would confirm the exchange's ability to meet its obligations during the session and ensure its equity data plans can collect, process, and disseminate quotation and transaction information throughout the entire session.

That rule change must be filed within 18 months of the SEC's approval of 24X to operate an exchange, a deadline that falls on May 27, 2026. In its initial filing, 24X said 18 months should be enough time for the equity data plans to make the necessary changes to accommodate extended hours.

The exchange proposed disseminating market data through its proprietary feeds, including top-of-book quotes, depth-of-book quotes, last-sale information, and historical data, as well as through APIs offered by third-party market data vendors. Data that would have been distributed to the SIP would be provided free to exchange members and vendors in real time.

In the new letter, which responds to concerns raised during the latest comment period, 24X points to emerging data infrastructure that it says would be available to overnight investors.

The SEC comment period for the proposed exemption closed on April 1, with many letters asking the regulator to deny the request. Sassoon wrote that critics are missing a key element of the proposal.

"These comments ignore the fact that the requested relief is narrowly crafted to be temporary," he wrote. "It would only be in place until the Equity Data Plans implemented the requisite changes to facilitate overnight trading. If the Equity Data Plans' predictions are accurate as set forth in their comment letters, then the exemptive relief would only need to be in place for several months."

Some history

Last December, 24X National Exchange requested an exemption from the requirement that the SIPs be fully functional for it to operate its overnight market session. When the exchange's first application for operation was approved in November 2024, the SEC said the exchange could not commence the longer session unless the equity data plans "established a mechanism to collect, consolidate, process, and disseminate quotation and transaction information at all times during the 24X Market Session."

The New York Stock Exchange, Nasdaq, and Cboe have all announced plans to expand equity trading hours, with NYSE and Nasdaq receiving regulatory approval. Cboe filed its proposal with the SEC last month.

In March, WatersTechnology reported that the operating committees of the US equity data plans, comprising the Consolidated Tape Association and the Unlisted Trading Privileges Plan, intend to launch extended hours on December 6, 2026. The SIP plan seeks near-24/5 trading, with a one-hour technical pause each day and three sessions: extended early hours from 8 pm to 9:30 am ET, regular hours from 9:30 am to 4 pm ET, and late hours from 4 pm to 8 pm ET.

The pause will begin at 8 pm ET, Monday through Thursday, and the new trade date will commence immediately afterward. Over time, the SIP anticipates being able to shorten the pause.

Other infrastructure is also expected to be ready this year. The National Securities Clearing Corporation started industry testing for 24/5 operations in equity markets in January and expects to launch on June 28, 2026.

Sassoon wrote that if the equity data plans' predictions are not accurate, the exemptive relief would encourage more rapid action by the plans.

Rakuten Securities, which submitted a letter supporting 24X's initial application, said temporary relief while consolidated SIP functionality is developed could allow regulators and market participants to gain practical experience with overnight exchange trading and evaluate its operation and potential impacts in an orderly way.

"In our view, such a carefully considered step could support the continued accessibility and global competitiveness of the US capital markets," Rakuten's letter said.

Rakuten invested in 24X in May 2025 to expand its US stock trading services by bringing around-the-clock trading to investors.

Nasdaq opposed the proposed exemption, saying 24X's application should not be granted because it is inconsistent with the Securities Exchange Act of 1934, which governs secondary trading of US securities.

"24X has not shown how exempting a national securities exchange from the very mechanisms that carry out the Congressional findings and objectives of Section 11A of the Act would further the goals and objectives of the Act," Nasdaq's letter said, "or otherwise be consistent with the public interest, the protection of investors and the removal of impediments to and perfection of the mechanism of a national market system."

Difference of opinions

In a separate letter, Joseph Saluzzi, a partner at Themis Trading, said that while 24X's application may have merit, 24X was approved as an exchange and therefore has more responsibilities than an alternative trading system.

"It's unfortunate for 24X that the Equity Data Plans are slow walking their upgrades, but becoming an exchange means 24X must abide by the Exchange Act rules," Saluzzi wrote.

Saluzzi argued that the requirements were made clear to 24X and that potential delays should have been anticipated, given that the plans are controlled by 24X's competitors. He added that if the exemption were approved, it would motivate other stock exchanges to request the same exemption.

"While these exchanges may offer data feeds with their quotes and trades, most investors would not be able to process these feeds and instead would be trading in individual silos that are not connected," he wrote.

Saluzzi said investors could be left unprotected and might place bids on stocks where lower offers are already present. Sophisticated trading firms, however, would be able to process those data feeds and create their own limit order books, identifying risk-free arbitrage opportunities.

But some believe those concerns can be addressed by existing technology. In February, Exegy launched a consolidated datafeed for overnight markets that includes an overnight best-bid-and-offer quotation service.

In a comment letter submitted to the SEC regarding 24X's proposed exemption, Exegy chief executive David Taylor wrote: "The absence of a formal Plan Processor during [overnight] hours is not a technical barrier to transparency. The technology to provide a consolidated view of pre-trade quotes and post-trade data is currently in production and running today."

Taylor said Exegy's overnight best bid and offer service provides a function equivalent to the services provided by the SIP plans during regulated market hours.

Sassoon noted that Exegy is not the only vendor working on consolidated overnight data. DxFeed and Webull have also recently entered the market.

"Thus, there currently exist mechanisms to consolidate market data in the overnight market," Sassoon wrote. "This is a natural evolution of the overnight market given the growing interest in overnight trading."

24X has also raised concerns that the SIP may be unable to meet its December deadline for extended hours. Sassoon noted that the equity data plans have not released important implementation details, including changes to symbol directory messages for eligible securities, exchanges' ability to support message changes such as corporate actions information, and the ability to disseminate all quotes and trades, including off-exchange trades, during extended trading hours.

The exchange's new letter argues that bringing a regulated exchange into a market currently dominated by alternative trading systems would add integrity for investors.

"ATSs, which currently provide opportunities for overnight trading, are not subject to the same heightened regulatory standards as a registered national securities exchange," Sassoon wrote. "Instead, they must comply with Regulation ATS."

Only certain alternative trading systems, known as SCI ATSs, are required to comply with the same regulation as exchanges covering capacity, integrity, resiliency, availability, and security.

"Such heightened regulatory requirements for technology would work to limit technology issues that have been experienced in overnight trading," Sassoon wrote.

Still, the CEO of a trading venue involved in the process, who asked not to be named, told WatersTechnology that any fundamental change to market structure should be implemented through a transparent rulemaking process and applied consistently across all venues.

"[24X's proposal] is creating the potential for uneven standards [and] unnecessary complexity that could have a negative impact on investors," the CEO said.

The CEO added that the SIP operating committee's framework for enabling exchanges to trade overnight was thoughtful and supportive of transparency, price discovery, and a level playing field, and said the industry should carry out that framework rather than introduce exceptions that could lead to unintended consequences.

Consensus remains elusive. Ocean Fintech Ventures, an investor in global financial technology and market infrastructure platforms, also supports granting 24X temporary relief. In its letter, Ocean Fintech said it sees "clear and sustained" demand for access to US equity markets beyond traditional trading hours.

If granted, the relief would facilitate overnight trading within a regulated exchange framework and create a controlled, observable environment for regulators and market participants to evaluate trading behavior outside traditional hours, Ocean Fintech said. Without that framework, the firm argued, overnight trading will continue to develop through alternative venues that may be less centralized or less transparent.

James Angel, an associate professor at Georgetown University, also supports the exemption. Angel said the industry should move toward a two-segment market: professional sessions during regular trading hours and extended-hours trading for mostly retail investors.

"Since we already have 24-hour trading, it is best that it be on regulated national securities exchanges," Angel said. "This will create the highest level of investor protection because of the surveillance and other activities conducted by national securities exchanges that are not conducted by ATSs. Rejecting the 24X request will just reduce competition to the detriment of investors."

Additional reporting by Wei-Shen Wong.