24X National Exchange LLC Request for Temporary, Conditional Exemptive Relief from Certain Regulatory and Statutory Requirements

Summary

SIFMA provided comments to the U.S. Securities and Exchange Commission (SEC) to provide 24X with a temporary, conditional exemption from certain regulatory and statutory requirements that would allow 24X to operate its exchange overnight from Sunday to Thursday prior to the relevant Equity Data Plans being amended (and the corresponding technology changes being implemented) to collect, consolidate, process, disseminate quotation and transaction in NMS stocks during these times. ¹

Excerpt

Executive Summary

We acknowledge 24X Exchange’s expansion to U.S. overnight hours has contributed to exchange innovation in the equity markets. However, we respectfully request that the Commission deny 24X Exchange’s request for a temporary exemption from the requirement for national securities exchanges to participate in the SIPs, for the following reasons:

• The Exchange Act, together with applicable Commission regulations, require registered national securities exchanges to participate in the SIPs so that consolidated exchange quote and trade information are broadly available to brokers, dealers, and investors.
• If the Commission grants the exemptive relief request and other national securities exchanges are subsequently granted similar exemptive relief, there would be no consolidated market data while national securities exchanges are operating, as required. This fragmentation would disproportionately disadvantage retail investors and institutional market participants (such as portfolio managers) that rely on consolidated SIP data, as they would lack the ability to access and integrate multiple proprietary data feeds needed to form a complete and timely view of the market.
• The SIPs have committed to being operable to support 23/5 trading by December 6, 2026. This is approximately six months later than the May 27, 2026 deadline the Commission selected for SIP operability prior to 24X launching overnight trading as a condition for approving 24X Exchange’s application for registration as a national securities exchange. This slight delay is appropriate to provide market participants time to continue preparations for a coordinated transition to overnight on-exchange trading.
• The requested exemption would blur the line between exchanges and ATSs, effectively creating an exchange unlinked to the national market system, something the current regulatory framework does not contemplate nor permit. Granting this exemption would be inconsistent with the Exchange Act’s requirement that national securities exchanges participate in a consolidated market system for the dissemination of quotation and transaction information.

Background

In 2024, the industry expressed concerns after 24X and NYSE Arca, Inc. submitted proposals to trade in the overnight session with different trading hours. SIFMA formed its Extended Trading Hours Task Force to work toward a more harmonized industry approach to extended trading hours in equities. The expansion of equity trading to overnight hours encompasses many aspects of the order and trade lifecycle, and SIFMA began, and continues today, to closely coordinate with various stakeholders—including national securities exchanges, alternative trading systems (“ATSs”), central clearing parties (“CCPs”), transfer agents, and regulators—not only to map the downstream impacts of overnight trading but also to raise questions and identify consensus ideas on how to address those questions.

At the time of approval on November 27, 2024, 24X was given 18 months to file a 24X Market Session Proposed Rule Change that would serve to provide notice to the Commission and the public of 24X’s intention to commence operation of the 24X Market Session, which could not start operating unless the Equity Data Plans “(1) have established a mechanism to collect, consolidate, process and disseminate quotation and transaction information at all times during the 24X Market Session that is equivalent to the mechanism established for Exchange Trading Hours other than the 24X Market Session,” and (2) the Equity Data Plans have notified 24X of their readiness. This deadline is May 27, 2026.