SEC Approves Overnight Trading Price Bands for National Market System Stocks

The SEC approved an amendment to a national market system plan governing extraordinary market volatility to establish the first phase of price band protections for overnight trading.

In the approval order, the SEC stated the amendment added a new section to the National Market System Plan to Address Extraordinary Market Volatility creating "Overnight Protected Hours," defined as 9:00 p.m. Eastern Time Sunday through Thursday to 4:00 a.m. Eastern Time the next day. During those hours, the rule requires the primary listing exchange for each stock to calculate and disseminate an overnight upper and lower price band.

The amendment requires the bands to be set 20 percent above and below the higher and lower, respectively, of two reference prices: the stock's official closing price and the consolidated last round-lot sale price as of 7:45 p.m. Eastern Time. The rule applies a 20 percent parameter multiplied by the product's leverage ratio for leveraged exchange-traded products, and establishes minimum thresholds of $1.00 for stocks priced under $1.00 or $3.00 for stocks priced at $1.00 or more.

The SEC requires primary listing exchanges to transmit calculated bands to the processors by 8:55 p.m. Eastern Time for public dissemination before 9:00 p.m. Eastern Time. The amendment also requires all trading centers operating during the protected hours to adopt written policies and procedures reasonably designed to prevent trades and displayed prices outside the bands.

Unlike the plan's regular-hours mechanism, the overnight rules do not include an automatic trading pause if a price band is breached. Instead, a primary listing exchange could declare a discretionary regulatory halt to maintain fair and orderly markets. Any stock halted overnight would not reopen until the next trading session.

The overnight protections are expected to commence on December 6, 2026, coinciding with the planned start of overnight trading.