The traditional market close could soon become a relic of the past as exchanges, brokers, and market infrastructure providers prepare for an always-on trading environment. Speaking to Trader TV, Munish Gautam global head of trading product and platform at Broadridge, says the growing global demand for US equities, rising retail participation, and advances in electronic trading are accelerating the shift toward extended trading hours, with 23/5 seen as a stepping stone to eventual 24/7 markets. The transition will require significant upgrades across trading, operations and settlement systems, alongside new approaches to data management, risk oversight and corporate actions. Gautam adds that AI and automation will be essential to supporting continuous trading and market surveillance.
Full Interview
Josephine Gallagher – So, this year is going to showcase a big push toward extended trading hours, which is largely led by the US exchanges. Tell us, what’s behind the shift?
Munish Gautam – I would say the change has been brewing for some time, but then three factors—the increase in global interest in US equities: an increase in retail participation, and then evolving market structure and competition. Now, let me break this down further. Global interest from US markets has been on an uptrend; they were actually around 40% of the world’s market cap as per MSCI a decade or two decades back, and now they’re around 60% and growing. So, everyone wants a piece of that pie. From the valley to the street, from AI to banks, you want an actual piece of that action. And then Asian and European investors would rather trade US equities in their time zone rather than at 1 am or 2 am, a with the retail participation growing, which used to be around 10% to 12% earlier, now it’s 18% to 22% and with the advent of mobile web based apps, as well as zero fee commissions, rising of Robin Hood’s Revolution of the World, that has increased a lot, and liquidity provision, electronic liquidity providers, they have the systems that work 24/7 and then ATSs (alternative trading systems) are already up overnight, so that increased competition is forcing everyone to have a rethink, and then join this bandwagon, because eventually in the 24/7 tokenized world, everything has to be there around the clock, so 23/5 is a good step towards that.
Josephine Gallagher – Interesting. Extended trading errors are only one part of the equation in itself, so what kind of technological or operational changes need to happen in order to kind of support the shift?
Munish Gautam – So this is a big change from a technology and operations standpoint, rather than historically markets been working or used to this end-of-day resets, so you have defined open, defined close, end of day resets. All of that needs to be changed now, because you have to have an always-on architecture, talking about technology from the front office to the middle office to the back office. You need to make sure that you have the ability to accept orders throughout the trading hours, and then to route and trade them. And in the middle office, you have to actually allocate, confirm, and make sure that they are ready to be allocated. So, for example, at 7:59 pm that’s your previous day, and then at 9 o’clock is the next day in the 23/5 world. So you need to have predefined rules and exception-based management in the middle office. Back office is where the biggest impact will be felt, that’s used to overnight processes, batch processing, that has to all change to be more real time. And again, the DTCC change in June will show the way it can be made continuously netted 24 hours based, and everyone has to look at the risk system, liquidity, margining, and processing, and settlement to be supporting 24 hours,
Josephine Gallagher – And looking at some of the challenges, like managing the likes, like corporate actions, however, and data inconsistencies, has been cited as some of the big challenges, so where are you seeing the biggest roadblocks to scaling extended trading hours globally?
Munish Gautam – I would say you called out a couple of factors. Corporate actions is a big one, and data in general, so reference data systems are used to pulling a big chunk of reference data at the start of the day, a snapshot-based. There is a pull in a way, you can say now we have to move towards a push base. You’re always on, you have a good copy, and then as events come up, you have a push, which you then refine to add or delete, so maintain a good copy at any given point of time. So you have to move towards a version one, so version one, version two, a version system, and a from and to, rather than applicable on a particular date. Is it from this time to that time? And corporate actions, people are thinking pragmatically of using halted status to begin with, while we get used to this real-time corporate action. And data, so, data has to be clearly defined in terms of, you know, standard settlement instruction, place of settlement, as talking about sources where people can go and pull things from, and then can help, you know, set up for AI.
Josephine Gallagher – Absolutely, I’m glad you mentioned that as well, because that kind of falls onto my next question. So, as these kind of changes evolve, visibility of the likes of shifting liquidity patterns, and that visibility across the broader trade life cycle, is really, really important, and becomes even more important. So, what role do you think the likes of data and AI will play in helping with that evolution and transition to extended trading hours?
Munish Gautam – I would say, without data and AI, it would be much more difficult to make this transition. But with AI now having clear defined rules and configuring an agentic AI style framework, where things can be fixed or addressed while humans are still sleeping, or looking at only limited number of exceptions, that can smoothen that transition. And then data is a big part of that as well. So, you have data sources which are predefined, where to go and pull through, and also train AI along the way. And then visibility is a good point. So, then overnight trading actually is a good harbinger of things to come. Something that happens at 3am could actually influence at 3 pm equally. So, having the full visibility and sort of anomaly detection, getting ahead of things is always better. And then in 24/ 7 world, you can get a good overview, because news happens all the time. So you need to have clear, defined, normalized data sources, which AI can then use and fix the problems as they arise in real time overnight without needing human intervention,
Josephine Gallagher – Gotcha. So, as a leader in the electronic trading business, or someone in the role, sitting in a role at a trading technology firm, what should their priorities be now as they prepare for this kind of transition?
Munish Gautam – I would say five-step process for them: one is look at everything end to end and front to back. So review every time-based dependencies, start of the day, end of day resets, so from connectivity to front office to execution to order management, and then also front to back, from middle office and back office, from order confirmation, funding, settle mental systems. And secondly, have their technology and operations work 24/ 7. AI is a big part of that, using agentic AI-based rules, having an always-on architecture, which is modular, service-based, and events-driven, consuming reference data. And then think of compliance, surveillance, and oversight from day one. It can’t be an afterthought. Something that happens at 2am should be easily contained as something at 2 p.m. So, for example, you know, a system that contains the blast radius has exception-based rules that can escalate, and then that to that point, fourth point is staffing and supervision. Who supervises? What’s the staff? What are the escalation paths? And then three is where AI can self-serve or where to go in case of a conflict, and management. And lastly, not to underestimate is governance, having communication with clients upfront, hand-holding them through this transition, engaging with the ecosystem from clearing houses to exchanges to DTCC. SIFMA has good working forums. FIX has a 24/7 working group already, and then piloting and testing, so the ability to test these things throughout the lifecycle, and then pilot them gradually. The greatest thing about extended trading hours is that it’s not a big bang; it’s an incremental change. So we are given an opportunity to walk before we can run.
