CFTC Questions Potential Move toward 24/7 Derivatives Trading

The CFTC Divisions of Market Oversight, Clearing and Risk, and Market Participants requested comment on "potential issues related to a designated contract market ('DCM') or swap execution facility ('SEF') electing to provide trading services on a 24/7 basis."

Staff flagged concerns about maintaining market integrity, system resilience and adequate collateral coverage outside normal banking hours.

Staff questioned:

• whether automated liquidation of customer positions is a "prudent risk mitigant" for Futures Commission Merchants ("FCMs") when customers are unable to post margin over a weekend.
• whether FCMs should "require customers with open positions going into a weekend to prefund additional margin as a cushion against adverse price moves."
• whether continuous trading would limit scheduled downtime, complicating software patching and system upgrades, or "heighten the risk of unplanned outages." (Staff emphasized the need for "live change deployments and rollback mechanisms" and coordination with third parties who may be "thinly staffed" during off-hours.)
• whether current customer risk disclosures were sufficient. (Staff asked whether the standard disclosure form required under Regulation 1.55 ("Public disclosures by futures commission merchants") should be revised to reflect "risks associated with 24/7 trading.")
• whether certain product types are better suited to a continuous market, and whether 24/7 operations should be prohibited until broader market infrastructure—such as collateral mobility on weekends—is in place.

On clearing, staff cautioned that illiquid off-hours trading could lead to "rapid shifts in prices, and thus rapid shifts in portfolio values," requiring DCOs and FCMs to hold proportionally greater liquid resources. Staff warned that, under 24/7 clearing, DCOs may not be able to "collect additional margin, if needed, on non-business days."

Responses are due by May 21, 2025.