FIA Report Sees Gradual Shift to 24/7 Markets

A new report from the Futures Industry Association suggests that the shift to 24/7 financial markets will be both gradual and require an industry-wide effort involving exchanges, clearinghouses, financial institutions, technology providers, end users and regulators.

The report, which is based upon three panels in a dedicated session at FIA’s Global Cleared Markets Conference in March, highlights a consistent theme across the session – while demand for 24/7 trading is clearing gaining momentum, achieving it depends upon the synchronised evolution of market structure, including operational and risk management frameworks. “Demand is clearly present, drivenby changing customer expectations and the influence of digital asset markets,” the report notes. “However, enabling continuous trading in traditional derivatives markets introduces complex interdependencies across clearing, collateral management, liquidity provision and operational resilience.”

High among these complexities is the need to update legacy systems and processes – many of which are built around batch processing and defined trading cycles – to support real-time “always on” functionality, such as that existing in digital asset markets.

The report also notes that payment systems and collateral infrastructure remain “critical constraints”, adding, “Whether through extending existing rails or adopting new technologies, the ability to move capital seamlessly across time zones and non-traditional hours will be essential.”

While the FIA paper clearly has a point on payments, the growth in stablecoins and general technological advances would appear to offer a pathway to faster, more efficient transfers. Here again, though, as has been noted repeatedly, regulatory clarity – indeed a framework for these products – is still required. Equally, when it comes to markets involving physical delivery, such as agricultural products, the complexities likely take on a whole new dimension.

In terms of what is required of industry participants, the paper summarises thus: “Technology providers must develop resilient architectures capable of supporting uninterrupted operations. Meanwhile, market participants must ensure their internal systems can manage real-time risk monitoring and operational workflows.

“Furthermore, market participants will need to operate in a “hybrid environment” for collateral, with both traditional payment rails and new forms of tokenised collateral

networks existing side by side for near term,” it adds. “Cybersecurity, automation and

system observability will become increasingly important as markets operate across longer

time horizons.”

Ultimately, the paper suggests that asset classes where liquidity and infrastructure already support extended trading hours will likely be first movers to 24/7, with others following at their own speed as the infrastructure is updated in a coordinated fashion.