CFTC Says 24/7 Derivatives Trading Suits Crypto, Not Some Traditional Markets
Summary
- The CFTC said a 24-hour trading framework may be suitable for blockchain-based firms but may not be appropriate for some traditional markets.
- The CFTC said longer trading hours could lead to lower liquidity, higher volatility, wider bid-ask spreads and a greater risk of market manipulation.
- The debate over longer trading hours is likely to continue as infrastructure develops, but oversight frameworks, liquidity management and market stability remain key challenges.
Forecast Trend Report by Period
The US Commodity Futures Trading Commission warned that expanding derivatives trading to a 24/7 schedule carries risks, highlighting structural differences between cryptocurrency markets and traditional finance.
CoinDesk reported on May 29 that the CFTC said in an advisory that "a 24-hour trading framework may be suitable for blockchain-based firms, but may not be appropriate for some traditional markets."
A 24/7 trading and clearing system is not appropriate for every asset class because market structures differ, the agency said.
In some markets or products, longer trading hours could reduce liquidity, increase volatility and widen bid-ask spreads. The CFTC added that such conditions could heighten the risk of market manipulation.
Round-the-clock trading is already standard in crypto markets, while traditional financial markets such as stocks and futures still operate during limited hours. Some exchanges and financial institutions have recently been considering longer trading hours.
As trading infrastructure develops, debate over extending market hours is set to continue. Oversight frameworks, liquidity management and market stability remain key challenges.
