By James Calloway

Off-exchange trading now comprises roughly half of US equity volume, and overnight trading is averaging $4.5 billion per session on 105 million executable shares — still only about 1% of total US equity trading. Those two figures framed the Security Traders Association's annual market structure conference in Washington, DC, this week, where panels dissected non-traditional liquidity from dark pools to 24-hour sessions.

Equities once traded only on NYSE and Nasdaq between 9:30 am and 4:00 pm New York time. Alternative trading systems eroded that model over the past 20 years, and overnight trading stands to erode it further.

What did the off-exchange panel say?

The panel "Off-Exchange Trading and Non-Bank Liquidity: The Face of Market Depth" brought together trading venues and electronic liquidity providers. Panelists said the number of liquidity providers, the types of liquidity offered, and the level of market complexity have all changed.

One claim carried a timeline: large language models are democratizing brokers' capacity to analyze liquidity patterns and navigate market structure, and that trend will gain momentum over the next couple of years as the technology spreads through the industry. Panelists framed this as a tailwind for dark liquidity, since participants can better assess its value. That is a projection, not a measured result — no adoption statistics or cost data accompanied it.

Asked what off-exchange liquidity looks like in five years, panelists pointed to more bilateral and customized liquidity, and said cheaper liquidity overall could increase trading volumes. On AI, panelists called its capabilities "stunning" today and said predicting them five years out is impossible.

What did the SEC's Selway say about tokenized stocks?

SEC Division of Trading and Markets Director Jamie Selway addressed the recently approved Innovation Exemption, which permits on-chain trading of tokenized National Market System stocks.

"'Innovation without arbitrage' remains our watchword," Selway said. "I believe that a five-year, conditional exemption from the definition of 'exchange' for Tokenized Securities Venues, or TSVs, that provide the use of automated market makers for permissioned participants to trade tokenized NMS stocks is a responsible step forward."

The exemption is conditional and time-limited: five years, permissioned participants only, automated market makers as the mechanism. What it does not address — interoperability with the lit market, retail access, or what happens when the five years expire — went unstated.

The off-exchange panel projected five to ten firms will file to be TSVs, but questioned how many will survive. The theme to watch, panelists said, is how the tokenized market ecosystem evolves alongside traditional equity market structure.

What changes on December 6?

The panel "The Always-On Market: Liquidity, Volatility, and the Future of 24/8 Trading" followed. Panelists said overnight trading is rapidly growing and becoming more competitive, with more order types, more functionality, and more participation.

The concrete milestone arrives on the evening of Sunday, December 6, when five US stock exchanges — Nasdaq, NYSE Arca, Cboe EDGX, MEMX, and 24X — are scheduled to launch extended overnight sessions, with the Securities Information Processor distributing market data.

Panelists argued the NYSE and Nasdaq brand names will attract traders to the overnight session, and that the SIP will distribute data at scale in a way overnight trading currently lacks. Both claims rest on brand recognition and infrastructure, not yet on measured flows.

What still needs fixing?

The static 20% price boundary above and below key reference prices — the collar limiting overnight price swings — is one aspect panelists said will need to be ironed out. A 20% band is wide by daytime standards, and its interaction with resting daytime orders remains untested.

Panelists' definition of success was specific: overnight trading that looks like, and is harmonized with, trading in the core daytime session. Success, in other words, means convergence — the overnight session stops being a separate market.

Whether the December 6 launches move overnight volume meaningfully above its current 1% share will be the first measurable test.