U.S. stocks sprint towards "never closing": Why did Nasdaq launch the "5×23 hours" trading experiment?

Author: Frank, MSX Research Institute

Used to trade US stocks only at night, just couldn’t sleep; in the future, maybe you won’t be able to sleep during the day either?

As the Crypto market becomes accustomed to the 7×24 never-sleeping rhythm, Nasdaq, standing at the core hub of TradFi, can no longer sit still.

On December 15, Nasdaq officially submitted documents to the U.S. Securities and Exchange Commission (SEC), planning to extend trading hours from the current 16 hours per day, 5 days a week (pre-market / market / after-hours), to 23 hours per day, 5 days a week (daytime / nighttime).

Once approved, U.S. stocks will trade from 21:00 on Sunday until 20:00 on Friday, leaving only a 1-hour market close window (20:00-21:00), with the official reason being to “meet the growing demand of Asian and European investors, allowing them to trade outside traditional hours.”

But upon closer inspection, you’ll find that the logic behind this is far more than that. Nasdaq is clearly conducting an extreme stress test for the future tokenization of stocks. We are gradually piecing together a continuous timeline:

Nasdaq and the U.S. financial markets are preparing for an “always-open financial system.”

1. From 5×16 to 5×23: Approaching the Limits of TradFi’s “Last Hour”

On the surface, this is just an extension of trading hours, but from the perspective of various TradFi participants, this step nearly pushes the technical capacity and coordination ability of the existing financial infrastructure to its physical limits.

It is well known that stock trading under TradFi is a finely tuned gear system. Besides Nasdaq, stakeholders also include broker-dealers, clearing agencies, regulators, and even the listed companies, which means that supporting a 23-hour trading system requires all market participants to communicate thoroughly and overhaul all related processes, including clearing, settlement, and cooperation systems:

• Broker-dealers and agents must extend customer service, risk control, and trading maintenance systems to operate around the clock, with operational and staffing costs rising sharply;
• Clearing agencies (like DTCC) need to upgrade trading coverage times and settlement systems, extending service hours until 4 a.m. to match the new “next-day settlement for night trading” rule (trades from 21:00-24:00 are settled the next day);
• Listed companies must also adjust the timing of financial reports or major disclosures, and investor relations and market participants must gradually adapt to the new reality that “significant information is priced in immediately outside traditional hours”;

Of course, for those of us in the East 8 zone, previously U.S. stock trading mostly occurred late at night or early morning. The future 5 days × 23 hours mode means real-time participation without staying up late—great news indeed. But it also raises a profound question—since the reform has already been decided, why not go all the way to 7×24 instead of leaving that awkward 1-hour gap?

According to Nasdaq’s public disclosures, the 1-hour window is mainly used for system maintenance, testing, and trade settlement, which exposes the Achilles’ heel of traditional financial architecture: under the current centralized clearing and settlement system (based on DTCC and broker/bank systems), there must be a physical downtime period for batch data processing, end-of-day reconciliation, and margin settlement.

Just like bank branches still do end-of-day account balancing, this 1-hour window acts as a “fault-tolerance window” in the real world. Although it requires huge manpower for shift work and system maintenance costs, it provides necessary buffers for system upgrades, clearing and settlement synchronization, fault isolation, and risk management under current financial infrastructure.

However, compared to the past, the remaining 1 hour in the future will demand nearly perfection from the entire TradFi industry in cross-role coordination, akin to an extreme stress test.

In contrast, blockchain-based Crypto and tokenized assets rely on distributed ledgers and atomic settlement via smart contracts, inherently possessing the 7×24×365 all-weather trading gene. There are no closing hours, no market halts, and no need to squeeze key processes into a fixed end-of-day window.

This explains why Nasdaq is pushing the limits with difficulty—not because they suddenly realized to “be considerate” of Asian users, but because the trend demands it— as the 7×24 Crypto markets increasingly blur the boundaries with traditional finance, the incremental trading demand from traditional exchanges is coming more from cross-time-zone global funds and longer liquidity coverage.

It can be said that after 2025, tokenization is already on the horizon. Nasdaq and other players have long been laying out behind the scenes (see extended reading: “Nasdaq Accelerates: From ‘Soup Drinking’ to ‘Meat Eating,’ Is the US Stock Tokenization Entering the Decisive Stage?”). From this perspective, the 23-hour trading system is not just a simple rule change of “opening a few more hours,” but a systemic transitional state, paving the way for stock tokenization, on-chain clearing, and a global 7×24 asset network:

Without overturning existing securities laws and the national market system (NMS), the idea is to first align trading systems, infrastructure, and participant behaviors toward an “on-chain” rhythm—testing and paving the way for more aggressive future goals (more continuous trading, shorter settlement cycles, on-chain clearing, and tokenized delivery).

Imagine that once SEC approval is granted, and the 23-hour trading system is operational and gradually normalized, the market’s patience threshold and reliance on “trading anytime, instant pricing” will be elevated. How far is the real “7×24” future?

When the tokenized U.S. stocks are officially launched, the global financial system will seamlessly transition into that truly “never-sleep” future.

2. What profound impacts will this have on the market?

Objectively, the “5×23” model could trigger a structural shock affecting the entire global TradFi ecosystem.

In terms of time scope, it significantly expands trading hours, which is a substantial benefit for cross-time-zone investors, especially in Asian markets. But in terms of market microstructure, it introduces new uncertainties in liquidity distribution, risk transmission, and pricing power, potentially leading to a “sustainable depletion” of global liquidity.

In fact, recent years have seen explosive growth in non-traditional trading hours (pre-market and after-hours) activity in U.S. stocks.

Data from NYSE shows that in Q2 2025, trading volume outside regular hours exceeded 2 billion shares, with a transaction value of $62 billion, accounting for 11.5% of U.S. stock trading that quarter, hitting a record high. Meanwhile, night trading platforms like Blue Ocean and OTC Moon also saw continuous growth in transaction volume. Night trading is no longer marginal; it has become a new battleground that mainstream funds cannot ignore.

Source: NYSE

Fundamentally, this reflects the concentrated release of the real demand from global traders, especially Asian retail investors, to “trade U.S. stocks in their own time zone.” From this perspective, Nasdaq’s goal is not to create demand but to re-integrate the off-market, low-transparency night trading—originally outside the system—into a compliant, centralized, and regulated exchange system, reclaiming the pricing power lost in the shadows.

However, the problem is that “5×23” trading does not necessarily lead to higher-quality price discovery. Instead, it may present a paradoxical double-edged sword:

• First, the risk of liquidity “fragmentation” and “dilution”: Although extending trading hours theoretically attracts more cross-time-zone funds, in reality, limited trading demand gets fragmented and diluted over a longer timeline. Especially during the “night” period under the “5×23” model, the existing U.S. stock trading volume during those hours is already lower than regular hours. Extending hours could widen bid-ask spreads, reduce liquidity, increase trading costs and volatility, and even make it easier to manipulate prices during thin liquidity periods;
• Second, potential changes in the price discovery structure: As mentioned earlier, Nasdaq aims to incorporate scattered orders diverted to OTC platforms like Blue Ocean and OTC Moon into the main system through the “5×23” model. But for institutions, liquidity fragmentation does not disappear; it merely shifts from “off-market dispersal” to “on-market time segmentation,” demanding higher risk control and execution standards. This fragmented liquidity environment significantly increases the cost of executing large orders;
• Finally, the “black swan” risk amplified by “zero latency”: Under the 23-hour trading framework, major unexpected events—be it earnings shocks, regulatory statements, or geopolitical conflicts—can be instantly converted into trading orders. The market no longer has the buffer of “sleeping on it overnight.” In the relatively thin liquidity night environment, such instant reactions are more likely to trigger gaps, sharp volatility, and chain reactions of irrational liquidations, exponentially increasing the damage of black swans without counterparties.

Therefore, I pointed out earlier that the “5×23” trading model is not just about “opening a few more hours,” nor simply about “less or more risk,” but a systemic stress test of TradFi’s price discovery, liquidity structure, and distribution of pricing power.

All of this is in preparation for the “never-closing” tokenized future.

3. Nasdaq’s entire strategic layout: all preparations point to On-Chain

If we extend our view and connect Nasdaq’s recent intensive actions, it becomes even clearer that this is a carefully planned, step-by-step strategic puzzle, with the core goal of enabling stocks to eventually circulate, settle, and price like tokens.

To achieve this, Nasdaq has chosen a path of gentle reform with a very traditional financial style. The evolution logic of the roadmap is extremely clear and stepwise.

The first step occurs in May 2024, when the U.S. stock settlement system officially shortens from T+2 to T+1. This appears conservative but is actually a crucial infrastructure upgrade. Then, in early 2025, Nasdaq begins signaling “all-weather trading” intentions, hinting at plans to launch continuous trading five days a week in the second half of 2026.

Subsequently, Nasdaq shifts its reform focus to a more covert but critical backend system—integrating blockchain technology into the Calypso system for 7×24 automated margin and collateral management. This step almost has no overt change for ordinary investors but sends a very clear signal to institutions.

By the second half of 2025, Nasdaq begins actively promoting reforms at the regulatory level.

First, in September, it formally submits a “tokenization” trading application to the SEC. In November, it explicitly states that tokenizing U.S. stocks is a top strategic priority, with plans to “push forward as quickly as possible.”

Almost simultaneously, SEC Chairman Paul Atkins stated in an interview with Fox Business that tokenization is the future of capital markets. By bringing securities on-chain, clearer ownership rights can be achieved. He predicts that “within about two years, all U.S. markets will migrate on-chain, achieving on-chain settlement.”

Against this backdrop, Nasdaq submitted its application for the 5×23-hour trading system in December 2025.

From this perspective, Nasdaq’s extension of trading hours to a “23-hour trading system” is not just a single reform but an essential step in its stock tokenization roadmap. Because future tokenized assets will inevitably pursue 7×24-hour liquidity, and the current 23 hours is the closest transitional rhythm to on-chain operation.

What is most intriguing is that regulators (SEC), infrastructure (DTCC), and trading venues (Nasdaq) demonstrated a highly coordinated rhythm in 2025:

1. SEC relaxes and sets the tone: While continuously easing regulations, it also releases expectations of “full on-chain” through high-level interviews, injecting certainty into the market;
2. DTCC solidifies: On December 12, DTCC’s subsidiary, DTC, received a no-objection letter from the SEC, approving its provision of real-world asset tokenization services in a controlled environment, with plans to launch officially in late 2026, addressing core clearing and custody compliance issues;
3. Nasdaq advances: Announcing plans for tokenized stocks, prioritizing the initiative, submitting the 23-hour trading application, and attracting global liquidity;

Source: DTCC official website

When these three lines are aligned on the same timeline, the tacit coordination is hard not to lead to a conclusion:

This is not coincidence or Nasdaq’s sudden whim, but a highly coordinated, continuous institutional project. Nasdaq and the U.S. financial markets are making a final sprint toward a “never-closing” financial system.

In conclusion

Of course, once Pandora’s box is opened, “5×23 hours” is only the first step.

Human needs, once unleashed, are irreversible. So, since U.S. stocks can be traded at midnight, users will inevitably ask: why do I still have to endure that 1-hour interruption? Why can’t trading be done on weekends? Why can’t I settle instantly with U?

As global investors’ appetite is fully raised by “5×23 hours,” the existing TradFi architecture will face its ultimate challenge. Only native 7×24 tokenized assets can fill that last hour gap. This is also why players like Coinbase, Ondo, Robinhood, and MSX, besides Nasdaq, are racing madly—those who fall behind will be swallowed by the on-chain tide.

The future is still early, but the time left for the “old clock” is running out.