Wall Street wants 24/7 trading, but somebody has to bankroll the weekend
Wall Street's expansion into round-the-clock trading raises critical questions about who will fund markets when traditional payment systems are closed.
Wall Street's move toward round-the-clock trading includes a key decision about who supplies cash when the main wholesale payment systems are closed. While extended hours offer investors more flexibility to adjust positions, they also place new responsibilities on financial institutions to ensure liquidity during non-business days.
Similarly, some stablecoin providers like Circle offer customers faster access to cash by maintaining funds at partner banks in advance, enabling around-the-clock redemptions at the cost of potential interest earnings.
Settlement delays reveal funding gaps
Two major DTCC subsidiaries postponed a day's securities settlement, leaving cash in the central counterparty's account at the Federal Reserve and reducing reserves available to banks.
Companies trusted the payments would go through, and the banking system had enough reserves to handle the temporary drop.
The delay occurred after a participant submitted erroneous trades, creating an unusually large payment obligation. DTCC invoked market-disruption rules and secured extensions from the Federal Reserve, but ultimately carried the balances into the next business day. NSCC added a start-of-day charge to its risk fund to cover the extra day of trades it had guaranteed.
Costs and risk management approaches
DTCC's multilateral netting process reduces equity payment obligations by an average of 98%, but companies still face costs when settlement is delayed. In the June incident, companies expecting payments had to wait for their funds, while DTCC determined that companies still owed money would receive interest based on what DTCC earned on the cash overnight.
Clearing firms have developed different approaches to manage weekend trading risks. Nodal, for example, set two options for selected Coinbase derivatives: limiting weekend trading to half the customer's excess margin, or allowing customers to use all excess margin minus any unrealized losses. Members supporting weekend contracts also pay a surcharge into the guaranty fund.
Research from the Chicago Fed shows why payment size matters as much as trading hours. David DeCarlo's analysis of CME's quarterly disclosures from Q3 2022 through Q3 2025 found the median largest single-participant payment obligation was $3.73 billion, with a severe but plausible scenario estimate of $24.31 billion.
Future developments and remaining challenges
The Federal Reserve has approved an expansion of Fedwire Funds and the National Settlement Service to include Sundays and weekday holidays, though implementation is not expected before 2028. Meanwhile, FedNow already operates through weekends but with a $10 million transaction limit that falls short of clearing companies' needs.
Tokenized securities represent another avenue for 24/7 trading. However, the announcement left open questions about when related banking and redemption services would be available.
International standards for systemically important stablecoins address when transfers become legally irrevocable and whether holders can redeem at face value during stress. But operational challenges remain—such as a payment failure at 3 a.m. on Saturday where the sender's records show the payment went through but the recipient has no spendable funds—highlighting the complex infrastructure needed to truly enable 24/7 financial markets.
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