On Friday, the SEC approved Nasdaq’s application to expand trading hours expand trading hours for NMS listed equities and exchange-traded products to 23 hours a day, five days a week. This excerpt from the SEC’s release approving the proposal explains how it will work:

Going forward, Nasdaq proposes to conduct trading 23 hours per day, 5 days per week. It proposes doing so in two trading sessions rather than three. First, it will conduct a “Day” trading session, which will be the same and comprise its existing Pre-Market Hours, Regular Market Hours, and Post-Market Hours trading sessions. The Day Session will commence at 4:00 AM ET and end at 8:00 PM ET, and it will continue to feature both the Nasdaq Opening Cross and the Nasdaq Closing Cross. Second, Nasdaq will conduct a “Night” trading session, which will commence at 9:00PM ET and end at 4:00AM ET the next calendar day. All NMS Stocks would be eligible to trade during the proposed Night Session.

As we explain below, between 8:00 PM and 9:00 PM ET on each weekday, the Exchange will pause trading on its market to conduct maintenance, testing, and to process those corporate actions, such as mergers, stock splits, and dividends, that will become effective the following trading day. The pause will also allow for market participants to process and clear trades before proceeding to a new trading day. Nasdaq proposes to keep its markets closed during all weekend hours, except that the trading week will commence with a Night Session on Sunday nights at 9:00 PM ET. The trading week will end at the conclusion of the Day Session on Friday.

On holidays or dates when the Nasdaq market is otherwise closed, the closure will be effective as of 8:00 PM ET on the day prior to the closure date, and the market will generally reopen at 9:00 PM ET on the closure date. If the closure date is a Friday, the market will reopen on Sunday evening at 9:00 PM ET.

The start date for the new extended trading hours remains a little murky. The SEC’s order notes that before it can kick 23/5 trading off, Nasdaq apparently has to file a further rule change proposal confirming that its systems are ready to handle night trading.

As I blogged back in December, a lot of folks on Wall Street aren’t crazy about this move. Among other things, market participants expressed concerns about investors waking to see “a stock blasted 10% higher or lower on thin overnight volume, driven more by traders’ knee-jerk reactions than by calm analysis.”

I’ve got to say, that argument seems a little more strained than it did back in December. I mean, is there anyone who’s witnessed the stock market’s trading history since the launch of the Iran conflict who can argue with a straight face that our currently well-rested traders have been making moves based on “calm analysis?”

– John Jenkins